Sunday, May 26, 2024
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Fiji to experience a slowdown: Westpac

Fiji’s economic outlook is expected to shift from high growth experienced in 2023 to a slower pace, falling below the historical trend at 2.5 percent for 2024.

This has been highlighted in the Westpac Bank’s May edition Economic Update

Westpac has attributed the slow growth to increased inflation, high outward migration, and subdued growth in trading partner economies are anticipated to pose considerable challenges to domestic demand.

However there are signs of resilience, notably from rising visitor arrivals and remittance inflows, offering some support amidst these challenges to the outlook.

Economic growth among some of Fiji’s major trading partners is expected to moderate such as Australia, New Zealand, Japan, India, and the Eurozone, followed by a potential rebound next year as central banks consider easing monetary policy as inflation falls to the target range.

Westpac said Fiji’s tourism sector achieved full recovery in 2023, marked by a record number of visitor arrivals and increased earnings. Despite initial concerns about a slowdown in source markets like Australia, New Zealand, and the United States, the tourism sector has been surprisingly resilient coming into the first quarter of 2024 with a significant increase in visitor numbers.

“On the fiscal side, in the first half of the 2023-2024 financial year, the Fiji Government experienced a net deficit of $114.9 million, amounting to -0.9 percent of Gross Domestic Product (GDP), compared to the budgeted net deficit of -5.6 percent. Government debt stood at $10,019.6 million or 75.9 percent of GDP as of January 2024, which is projected at 78.6 percent of GDP by fiscal year-end.”

The Bank added that Fiji’s economic outlook for 2024 holds promise amidst potential headwinds. External uncertainties include elevated commodity prices, restrictive monetary policies, the Ukraine-Russian conflict, and the Middle East crisis.

As Fiji enters peak tourism, a potential drop in Australian visitors and further, lack of investment into accommodation alongside domestic risks like natural disasters and continued labour migration could hinder the medium-term growth outlook.

Ilaitia Ravuwai
Ilaitia Ravuwai
Journalist | news@fijilive.com

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