The International Monetary Fund says that the Fijian economy is expected to grow by three percent this year, after a strong rebound from the pandemic.
It went on to say that Fiji’s economic growth is returning to historical trends.
In a press conference, IMF Representative Marshall Mills said this after expanding by 20 percent in 2022 and 8 percent in 2023.
Mill said that Fiji’s Gross Domestic Product has now surpassed 2019 levels, which has been driven by a strong revival in tourist inflows, particularly from Fiji’s partners Australia and New Zealand.
He indicated that the country’s fiscal position and debt-to-GDP ratio have continued to improve significantly, primarily because of the recovery and revenue measures in the Fiscal Year 2023-2024 budget.
Mills said the fiscal deficit is expected to decline to 4.4 percent of GDP in 2024 down from 5.9 percent in 2023, while public debt has fallen from a peak of 91.5 percent of GDP at the end of 2021 to 80.4 percent at the end of 2023.
IMF said inflation is also moderating after ticking up past five percent in 2023, owing in part to the temporary effect of the mid-year Value Added Tax increase.
He said inflation is expected to fall to around three percent by the end of 2024.
Mills said major downside risks to the economic outlook stem from unexpected global developments that would reduce tourist inflows and from tighter than expected domestic supply-side constraints, in particular, labor shortages, delays in the investment plan, and hotel capacity.
He said in this context, the Fijian Government and relevant stakeholders are appropriately aiming to deliver stronger inclusive goals while rebuilding policy buffers.
Mills added that achieving these goals will require additional gradual fiscal consolidation, a measured normalisation of monetary policy, and an ambitious reform program, which should tackle the key constraints to growth, further boost resilience, and address long-term challenges, including climate change and emigration.
