Steady is a word I would use to describe Fiji’s economic performance over 2025. No one expected Fiji to hit the dizzy heights achieved immediately after the pandemic. Having quickly recovered the lost ground over 2022-2023 and with scarce ‘big ticket’ investment expenditure items, economic growth was always going to slow. In fact, GDP growth eased to 3.5 per cent last year versus 9.4 per cent in the year prior and 17.7 per cent in 2022. Economic growth now is more in tune with the annual average growth prior to the pandemic. Most commentators believe Fiji’s economy expanded by about three per cent in 2025.
That’s still a commendable outcome considering Fiji has lost a number of its people to long-term employment opportunities overseas which has seen its population growth slow in recent times.
The resilience of consumer demand is keeping the economy afloat. And that is supported by remittances, stronger farm income due to favourable export volumes and prices, and wage increases.
Something that failed to live up to expectations
A tad disappointing has been new business investment this year. Privately funded construction work done, although trending up, is still 24 per cent below its recent peak. Despite Fiji’s vaunted multi-billion-dollar private investment pipeline, the conversion rate to new commencements has been slow and low. That said, building approvals data have picked up strongly recently.
Let’s hope of these permitted projects hit the construction phase in the new year and catapults Fiji to a higher plane of economic growth and keeps it there for a long period of time. Bringing new sources of economic growth is an ongoing challenge and Fiji continues to rely on international tourism for its investment and jobs growth. Perhaps a little more progress towards a mixed economy status would have been ideal.
How would you assess the national budget performance so far?
Governments don’t have a ‘magic wand’ and budgets are limited in what they can achieve because resources are scarce, especially in an environment where economic growth is not really translating into strong jobs growth in the private (formal economy) sector. In addition, budgets have to balance past promises, vested interests, deficit implications and expenditures associated with rebuilding after natural disasters.
This has meant that rolling out massive capital works program to improve core service delivery has been a challenge for successive governments in Fiji. The way to turn this around is to have much stronger business investment. That will come. We know that Fiji’s space requirements have increased, boosting fresh interest and investment in hotels, new office towers, shopping centers, warehouses and factories. Fiji’s increasing role as a regional distribution hub, access to finance, lower borrowing costs and increasing interest from foreign investors are all playing a part in sowing the seeds for Fiji’s upturn in commercial and industrial buildings. Once that cycle becomes entrenched, government finances will improve, and it will be in a stronger position to bring in new infrastructure investment in schools, hospitals, policing, utilities, ports, jetties and roads.
In the meantime, overall public demand (ie operating and capital expenditures combined) remains high and that is exactly what the economy needs in this soft transitioning period to a mixed economy status. Higher public demand is keeping people in jobs, which, in turn, is sustaining household final consumption expenditures.
The year ahead. What can we expect in 2026?
I can see some headwinds for private consumption expenditure next year. Post pandemic, remittances boosted consumer demand when it lifted from below $F500m to above $F1200m. However, that driver of household final consumption expenditure is reversing or has run its course.
Migrant (long-term) departures to countries like Australia and New Zealand is reversing and will unwind further as destination markets tighten pathways to a permanent residency visa.
Fiji’s long-term departures to Australia fell 38 per cent in the year to June 2025 and is now 51 per cent below the peak of 2023 (see accompanying chart).
Meanwhile, Fiji’s migrant arrivals from Australia (after having lived in the country for at least 12 months) has picked up strongly. It rose by 30 per cent in the year to June 2025. Put this together, Fiji’s net population outflow to Australia (ie migrant departures to Australia less migrant arrivals from Australia) is falling rapidly. It fell 51 per cent in the year to June 2025 and is 65 per cent below the 2023 peak.
Fiji’s population movement with Australia
We see similar trends for NZ. Meanwhile, people going overseas for less than 12 months, mostly under various employment schemes such as the Pacific Australia Labour Mobility (PALM) program, has been steady.
So, the main sources of remittances growth in more recent times, either through long-term or short-term stay overseas, is unwinding as destination countries make it tougher to migrate to a permanent resident visa. That means remittances will plateau with the risk of it even falling a touch next year. It will be risky to rely on remittances to do all of the heavy lifting for consumer demand in 2026.
Offsetting some of the negatives from remittances will be jobs growth in the private sector. We are banking on Fiji having a stronger business investment year and that will be a trigger for more hires. A higher number of people in employment is a positive for consumer demand. If the roll out of material new projects doesn’t come through, I see consumer demand softening in 2026.
Fiji’s goods exports should improve and that augurs well for farmer income. Services exports, underwritten by international tourists to be solid as economic conditions in key markets lend themselves to more discretionary spending including an overseas holiday. Fiji could well break the one million visitor mark next year.
All things considered, we believe, GDP growth of three per cent is the baseline projection for 2026 with the risk tilted on the upside. If some of the larger projects in the residential, commercial and industrial space, start early in the year, Fiji will do better than 3 per cent.
What’s next for Fiji? Is a three percent economic growth enough to lift standards of living across the economic spectrum? How can Fiji accelerate its development so it can move up the prosperity ladder quicker?
Let’s not forget that Fiji is a small, developing country with slowing population growth. Prior to the pandemic, GDP grew by an average of 2-3 per cent per year, supported by externally generated wealth via tourism and remittances.
Maintaining that economic growth when the country is losing its population to overseas migration is difficult but, has been achieved, which is commendable.
A large part of the population is in the rural economy, which hasn’t really got going. Fiji has not invested in commodities that fetch high prices in global markets but has put all its eggs in the sugar basket.
Infrastructure is in deficit, so getting products to market is expensive.
The formal economy is small and the number of taxpayers a fraction of formal employment.
That being said, I believe Fiji can consistently achieve economic growth of greater than six per cent and sustain it over a long period of time. Fiji has options. International trade in goods holds the key to unlocking Fiji’s economic potential.
Go big on agriculture
I say unleash the true potential of the rural economy. By doing so, economic growth will be shared and more evenly distributed.
Agriculture has large indirect benefits. Higher farm income benefits household service sectors like retail trade, telecommunications, construction, recreation, accommodation and food services and transport. Fiji can produce crops at scale and find markets overseas to grow farmers income and spending power. The facts are that the rural economy comprise the bulk of private consumption expenditure. If the farmer economy is doing well so too will the formal economy.
Household final consumption expenditure by sector
Diversify into commodities with strong global demand and don’t put all eggs in one basket.
Invest in support infrastructure, both hard and soft, such
· Refrigeration facilities
· Long-term land leases
· Reliable water, electricity and labour supply
· Better roads, ports and jetties
· Planting material, high yield and disease resistant seedlings, training, fertilizer and pesticides, transport subsidy to support large-scale agricultural production and exports.
Using the tools, techniques and policy levers of the developed world won’t work for Fiji. Monetary policy on its own can’t unlock household spending power. Increased agriculture export volumes and potentially higher prices can provide access to more income, spending power and sustain businesses as well as jobs. It will allow Fiji to reduce its dependence on tourism and remittances as the main sources of growth and have a more resilient and broadly based economy in the future. Above all, it will be a shared prosperity.
KISHTI SEN is the senior Pacific economist with the ANZ Bank Group based in Sydney, Australia. The views expressed in this article are his and do not necessarily reflect the views of this newspaper.
