The Fiji economy is now forecast to grow by 3.8 percent this year, an upward revision from the 2.8 percent projected in June.

The upgrade in economic growth reflects notable improvements in several partial indicators from the middle of the year.

RBF Macroeconomic Committee Chair, Ariff Ali says underpinning the higher growth is the better-than-expected outturn in visitor arrivals, which grew by 6.3 percent in the year to September, almost twice the projected increase in arrivals.

Ali says consumption spending has gathered pace, supported by higher incomes and remittances, tourism-driven demand, higher Government spending, and the pickup in new lending.

He states that investment activity continues to progress but at a slower-than-desired pace.

While labour shortages and ease of doing business processes are gradually improving, he highlights that investors still face a relatively higher-cost environment, impacting both the completion of existing and the commencement of new projects.

Similarly, growth for 2025 has now been upgraded to 3.4 percent from the three percent expected earlier.

Ali says the service and related sectors remain the main contributors to growth, followed by industrial and primary sectors.

In 2026 and 2027, economic growth is forecast to be 2.9 percent and 2.8 percent, respectively, with the economy reverting to its long-term growth rates.

The Committee also notes that based on the GDP report by the Fiji Bureau of Statistics, there was a slight downward revision to 2022 GDP (from 20.0% to 19.8%), as well as the 2023 GDP coming in lower than estimated (from 8.0% to 7.5%).

Ali says at the same time, the FBOS report also indicates that outcomes in thirteen sectors are still below pre-pandemic levels as of 2023, which the Committee projects to note a gradual return over the near term.

On the positive side, he says eight sectors and the overall economy have already surpassed pre-pandemic levels in 2023.

However, the RBF Governor says while natural disasters, elevated geopolitical tensions, and further slowdown in trading partner economies pose downside risks; higher tourist arrivals from Dallas and new flight routes, pickup in sectoral production, and greater stability in the business environment post-budget, as highlighted in the August 2024 Business Expectations Survey, could weigh positively on growth.

Ali says complementing the outcome are the expected slowdown in resident departures amid tighter immigration policies in source countries and productivity gains from imported labour.

The Chair concluded, “Although there are symptoms of improvement, we must remain agile to create an economic terrain to foster sustainable economic growth.”

Finance Minister Professor Biman Prasad says that in the last two years, the government has provided predictability, transparency, and accountability in its policies.

Prasad states that Prudential Financial management has allowed the government to reduce its debt-to-GDP ratio below 80% from 90% which was inherited two years ago.

The Deputy Prime Minister adds that they can see a lot of confidence in the economy and this is good for both consumption and economic growth.

Prasad stresses that contrary to forecasts by some economists, Fiji’s tourism industry has continued to grow together with new investments in hotels and accommodation.