Sunday, March 3, 2024
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RBF upgrades economy expansion projection

The Reserve Bank has projected the economy to expand by 8.2 per cent this year, which is an upgrade from 8 per cent growth expected earlier.

Visitor arrivals are expected to be 4 percent higher than 2019 and reach a new record of 930,165 visitors.

The Central Bank said this means the post-pandemic economic recovery in Fiji is now complete, as the economy has returned to the 2019 level of GDP.

The RBF said the upward revision reflects the exceptional recovery in the tourism industry as up to October this year, 772,172 tourists graced our shores, around 3 percent higher than the same period in 2019 and the spillover of higher tourist arrivals increased consumption spending and boosted aggregate demand.

Investment spending has also been rising, although at a relatively gradual pace.

However, in contrast, the natural resource sectors continue to show dismal performance and have been a drag on growth.

The RBF said sugar, mineral water, gold and the forestry sector outputs noted annual contractions so far into the year due to industry-specific supply side issues.

Over the medium term, economic growth is expected to return to trend.

The current capacity constraints in the tourism industry are expected to keep annual visitor arrivals growth at around three percent, slightly lower than the trend before the pandemic.

However, investment spending is expected to fast-track from next year due to more clarity on taxes and incentives, pent-up demand from the pandemic and continuous improvements in the local business environment.

As a result, the economy is projected to grow by 3.4 percent in 2024 and a further 3 percent in 2025 to 2026.

The services and industrial sectors are expected to be the leading drivers of growth, while the primary sectors are expected to remain broadly flat.

Despite the positive outlook, there are downside risks.

The global economic outlook remains fragile as it suffers from weak demand, slowdown in China, tight labour markets, rising commodity prices and elevated inflation.

Ilaitia Ravuwai
Ilaitia Ravuwai
Journalist | news@fijilive.com

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