The Reserve Bank of Fiji says the economy is poised to achieve the eight per cent growth forecast for 2023.
In a statement, the Governor of Reserve Bank, Ariff Ali said this is despite the global economy challenges and slight downturn.
Ali said that in its July 2023 World Economic Outlook, the International Monetary Fund expects global growth to decelerate (from 3.5% in 2022 to 3.0% in both 2023 and 2024), with economic activity being weighed down by central banks’ monetary policy tightening to contain the still high global inflation.
He said in particular, growth in our two major tourism source markets, Australia and New Zealand, has been subdued and is likely to remain weak for the remainder of the year.
“In the first half of the year, labour demand and consumer spending have been strong.”
“Despite noting a recovery, investment spending remains below pre-pandemic levels. Additionally, indicators used to assess the performance of the tourism industry, such as visitor arrivals, hotel occupancy and earnings, have surpassed 2019 levels, signifying a positive trend that is projected to continue into the second half of the year.”
“This has been supported by increased capacity as well as new routes by the national airline. In addition, the expansionary posture of the Fiscal Year 2023–24 National Budget is likely to positively impact the economy in the months ahead,” he added.
The Central Bank has also indicated that stable domestic activity has been bolstered by a robust financial sector, where private sector credit has expanded (6.1% y-o-y in June), partly due to a rise in new lending by banks (7.1% cumulative to June).
Ali said the out turn is supported by the low interest rate environment as a result of the supportive monetary policy stance and complemented by substantial levels of banking system liquidity ($2.5 billion as of 26/07).
The Governor added that despite near-term concerns about the global economy, Fiji’s macroeconomic prospects are positive, and the outlook for RBF’s twin monetary policy objectives remain intact.
“With this backdrop, the current accommodative stance will be maintained, and the RBF will continue to closely monitor global and domestic economic developments and adjust monetary policy accordingly,” Ali said.
