The Reserve Bank of Fiji has revised the country’s economic growth forecast for 2026 down to 1.5 percent from the 3.0 percent projected in November last year, citing the impact of the global oil price shock and weaker visitor arrivals.
In its latest Economic Review, the RBF said domestic economic activity slowed during the review period, with lower tourism expectations and downward revisions across most sectors contributing to the weaker outlook.
The central bank said the revised forecast reflects the strain the economy has already absorbed from higher global oil prices.
However, it noted that some of those pressures are beginning to ease, with global fuel prices declining and a tentative peace agreement in the Middle East reducing immediate risks.
Despite the improving external environment, the RBF warned that several uncertainties remain, including the possible onset of a strong El Niño weather pattern.
It said a severe El Niño could reduce hydroelectric power generation, increasing reliance on imported fuel for electricity production, while also driving up imported food prices.
The RBF also identified cost-of-living pressures and election-year uncertainty as ongoing risks that could weigh on business and consumer confidence.
The central bank said the recently announced 2026-2027 National Budget is expected to provide targeted short-term support despite limited fiscal space, but its overall impact on economic activity and confidence is likely to be modest initially and will become clearer as implementation progresses.
