THE Asian Development Bank has downgraded Fiji’s economic growth outlook for 2026 and 2027 as high fuel costs, geopolitical tensions and the threat of a strong El Niño weigh on economic activity.
In its Asian Development Outlook September 2026, the ADB projects Fiji’s economy will grow by 2.2 per cent in 2026 and 1.9 per cent in 2027. This is down from its July forecasts of 2.6 per cent and 2.5 per cent respectively.
“External pressures temper an otherwise resilient outlook,” the report said.
Despite the downgrade, the ADB said tourism remained resilient and investment activity continued to provide support to the economy.
Visitor arrivals between January and July increased by 4.3 per cent, with strong growth from Australia and the United States.
However, tourism earnings fell 4.9 per cent year-on-year in the second quarter and 1.7 per cent during the first half of 2026 because of shorter stays and weaker visitor spending.
The ADB said forward bookings remained positive, with bookings for the next three months representing 72 per cent of available room nights, compared with 70 per cent a year earlier.
Investment was another bright spot, with new investment lending increasing by 54.5 per cent in the year to June.
However, industrial performance was mixed.
Gold production increased 6.2 per cent in the year to July, while forestry remained weak, with mahogany production falling 27.4 per cent and sawn timber declining 54.7 per cent.
The report also highlighted growing risks from El Niño, warning that reduced rainfall could affect agriculture, fisheries and hydropower generation. ADB said the expected intensity of El Niño was one factor behind weaker growth forecasts across the Pacific.
Inflation is also expected to remain a challenge.
Fiji’s inflation forecast has been increased to 3.9 per cent for 2026, before easing to 2.5 per cent in 2027, with higher fuel, electricity and food costs driving price pressures.
Headline inflation reached 7.6 per cent in August.
Meanwhile, the fiscal deficit is projected to widen from $776million, or 5.5 per cent of GDP, to $1.1billion, or 7 per cent of GDP, while public debt is expected to reach $12.6billion, equivalent to 84.8 per cent of GDP, by the end of July 2027.
The ADB said risks remained tilted to the downside, citing global fuel prices, geopolitical tensions, rising living costs, skills shortages, election-related uncertainty and the potential impact of a very strong El Niño.
