Following on from warnings that Fiji could slip into a recession if the Middle East conflict drags on beyond six months, there is now concern that a sharp downturn in tourist arrivals may be looming. This projection stems from global instability and rising costs connected to the crisis.
The outlook was highlighted in the Asian Development Outlook (ADO) 2026 released by the Asian Development Bank. It examined how geopolitical tensions could affect small, tourism-dependent economies like Fiji, highlighting the risks ahead.
Tourism Action Group chair Damend Goundar says the anticipated downturn is already being factored into industry planning. Stakeholders, he noted, had expected disruptions and are now working closely with Government to cushion the impact.
He said immediate efforts are focused on protecting existing bookings and maintaining visitor confidence. Beyond that, attention is shifting to the medium and longer term, particularly from the second quarter into early 2027, where strategies will be needed to stimulate demand and sustain arrivals.
The crisis, he warned, is unlikely to ease quickly. Instead, its ripple effects are expected to be felt over time, especially through rising fuel costs and potential supply constraints. Of particular concern is fuel availability in the country, an issue that could have far-reaching implications. He also cautioned that further increases in fuel prices are likely, placing added pressure on airlines and travel affordability which are two critical drivers of tourism flows. At the same time, there may be additional, unforeseen challenges emerging, reinforcing the need for vigilance and preparedness across the sector.
The reactivation of the Tourism Action Group in March signals a coordinated response to these emerging risks. It reflects a recognition that proactive planning and collaboration are important in navigating uncertain times.
Again, we stress the importance of preparation. A coordinated national approach will be key to cushioning the negative impacts and ensuring resilience across the tourism industry.
Developments in the Middle East continue to evolve, with shifting alliances and rising tensions contributing to uncertainty. Reports of Kurdish mobilization west of Iran, alongside calls by US President Donald Trump for a blockade of Iranian ports and coastlines, have heightened fears of escalation and forced renewed volatility in global oil prices.
On the home front, the implications are significant. Reserve Bank of Fiji Governor Ariff Ali outlined three possible economic scenarios. Even in the best-case outcome, where the conflict ends quickly, the economy could still contract by around 0.5 to one per cent.
If the conflict continues for another three months, growth could slow, falling from about three per cent to near one per cent or lower. Should it persist beyond six months, the outlook becomes far more serious, with the real possibility of zero growth this year without an extraordinary turnaround.
With tourism now firmly in the spotlight, we certainly have a massive challenge before us. Again, we say, these warnings are not meant to alarm us, but to inform and empower us.
We have to acknowledge our vulnerability. We know that we are heavily reliant on imports, and fuel costs ripple through every aspect of daily life, from transportation to food prices.
While we cannot influence events unfolding in the Strait of Hormuz, we can control how we respond!
