FIJI’S tourism industry may emerge a likely winner in US President Donald Trump’s tariff crusade as economists in our major source market Australia predict more easing of the country’s official interest rates this year to buffer the expected slowdown in global growth as a result of the US tariffs.
ANZ’s Australian Research team yesterday changed earlier outlook on what the Reserve Bank of Australia (RBA) is likely to do following President Trump’s “Liberation Day” tariff announcement on Wednesday, which saw Fiji on the list of countries targeted by the US under its controversial reciprocal tariff regime.
“This morning (yesterday), our Australian Research Team changed their RBA call for 2025,” ANZ international economist Kishti Sen told this newspaper.
“Instead of one more cut, another two rate reductions are now predicted, so three more to come.
“This due to Trump’s tariff announcements yesterday (Thursday) and its likely impact on global growth.
“We think the RBA would cut rates to shore up consumer confidence and keep demand up and the economy growing. Perhaps some good news for Fiji’s tourism industry if these cuts do materialise,” Mr Sen said.
Fiji’s Minister for Finance Prof Biman Prasad had labelled as “disproportionate and unfair” Fiji’s inclusion on the list with a 32per cent across the board tariff on Fijian exports into US, given that “96 percent of US imports into Fiji attracts either zero duty or just 5 percent”.
He has promised that Government will work with key stakeholders and US counterparts to get to the bottom of the “retaliatory tariff”.
Fiji however is not alone. Australia copped a 10per cent tariff on exports into US, which riled up its government and opposition and led ANZ economists to “expect the RBA to ease in May, July and August (25bp at each meeting).”
That, they believe, “would see the cash rate at 3.35per cent come August,” meaning more money in the pockets of Australian consumers and, according to Mr Sen, the possible positive spin offs for Fiji tourism.
“Australia is Fiji’s main tourism market and 455,228 Aussie trips were made to Fiji in 2024 with nearly 80per cent of those for leisure and relaxation,” he said.
“But tourism after all is a discretionary expenditure and influenced by two main factors: income and price.
“If people feel confident about their income, which, in turn, is a function of job security, they will get on a plane and go overseas for a holiday.
“I think the RBA cutting rates will support demand and give people the confidence to maintain their discretionary expenditures in some form.
“Fiji may also consider some reduction in fees and charges such as lowering departures taxes to make Fiji a more competitive holiday destination while the world rides out the jarring impact on trade flows and economic activity from the new tariff measures announced by the United States,” Mr Sen said.
Note: This article was first published on the print version of the Fiji Times dated April 5, 2025.