RBF warns of a challenging 2024
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2024 will be a “challenging year”, the Reserve Bank of Fiji has warned, as tourism has reached capacity and Fiji’s workforce continues to erode.
“The Fijian economy is projected to decelerate as the substantial growth in tourism and consumption will taper off,” RBF said in a statement yesterday.
“In addition, the continued loss of skilled and semi-skilled workers and their families (around five percent of the population) will adversely affect productivity and translate to lower domestic demand at the same time.
“The RBF will continue to monitor the latest domestic and global economic developments, and align monetary policy accordingly.”
The Fijian economy continues to struggle with low spending on investments and poor performance in the primary and natural resource sectors, which RBF said are suffering “due to industry-specific issues”, with sugar, forestry, gold and mineral water outputs contracting last year.
Tourism and remittances, however, have held the fort — a new record remittance of $1.25 billion was received last year and this put more money in the hands of Fijians and boosted spending.
“The 929,740 visitor arrivals last year set a new record, surpassing the 2019 level by 4.0 per cent and the previous year by 46.1 per cent,” RBF stated.
“The tourism-led boost to the economy improved employment prospects and raised incomes which were also complemented by a new record inflow of remittances ($1.25b).
“The higher disposable income boosted aggregate demand, particularly, consumption spending.”
Headline inflation rate was 5.1 per cent in December and is expected to moderate to three per cent at the end of the year while foreign reserves, at $3.3 billion as at January 31, was sufficient to cover 5.3 months of retained imports of goods and services.
With banking system liquidity “ample at $2 billion (31/01/2024)” helping keep lending rates at “historical lows”, the central bank has again kept its Overnight Policy Rate (OPR) at 0.25 per cent for the fifth consecutive year running.