The Reserve Bank of Fiji Governor says despite uncertain prospects for the global economy, the recovery of Fiji’s tourism industry is providing momentum for domestic economic growth.
However he has also flagged that inflation will be higher than earlier projected, as a result of these same global pressures.
“Since the opening of borders, tourist arrivals have totalled 72,132 between December 2021 and March of this year, with 21,390 visitors recorded for March alone. While most tourists have come from Australia, the gradual easing of global travel restrictions suggests that arrivals from all other source markets are expected to increase, generating positive spill over benefits to other connected industries,” Governor Ariff Ali stated today.
In a statement released this afternoon, the RBF says imported inflation increased in March, contributing to overall headline inflation of 4.7% percent. Price rises were mainly for food and fuel, and related commodities. Headline inflation is now forecast to reach 5% by the end of 2022, which is 0.5% higher than earlier forecast.
Fiji mineral water, electricity and sawn timber production increased in March, while gold output declined. Tax collections and vehicle registrations improved, while investment spending stayed subdued.
Recruitment, especially in the west as the tourism industry prepares for its peak season, is up.
Governor Ali said “in the first three months of this year, the drawdown of new loans from commercial banks totalled $716.9 million, much higher than the $501.3 million in the same period last year. Furthermore, banking system liquidity remains high at $2,051.7 million (27/04), placing downward pressure on lending rates, as commercial banks’ cost of funds hover near historical lows.”
The Bank has maintained the Overnight Policy Rate (OPR) at 0.25%.
The RBF says prospects for the global economy are uncertain due to the war in Ukraine, as “heavily sanctioned financial markets, trade boundaries, and constrained shipping routes have interrupted the supply of fuel, food, and other critical commodities. These factors, combined with high freight costs and disruptive COVID-19 containment lockdowns in China, have compounded price pressures.”
The International Monetary Fund has downgraded global growth projections for both 2022 and 2023 to 3.6%.
