Fiji’s economy is expected to slow further in 2026 as higher fuel prices, freight costs and global instability place renewed pressure on households, tourism and Government finances, according to the World Bank’s May Pacific Economic Update.
The report projects Fiji’s economic growth to ease from 3.2 per cent in 2025 to 2.7 per cent in 2026, as the country grapples with the impact of global energy shocks linked to the Middle East conflict and ongoing shipping disruptions.
The World Bank warned that higher delivered fuel costs, rising airfares and increased freight and insurance charges would weigh heavily on Pacific economies, including Fiji.
“Higher delivered fuel and freight and insurance costs could reverse disinflation,” the report stated.
The report noted that Fiji’s tourism-driven economy remained highly exposed to international shocks, especially changes in airfare prices and global travel demand.
“Jet fuel-linked airfare dynamics and higher delivered freight costs represent headwinds to services and import-intensive segments,” the report said.
While Fiji recorded 3.2 per cent growth in 2025, the World Bank said this followed a “clear two-phase trajectory”, with slower activity early in the year before a modest recovery supported by increased arrivals from North America and Europe.
The report said Government spending and construction activity helped support growth last year, alongside strong VAT collections and steady consumer lending.
“Services remained the main growth driver; construction gained momentum on stronger public investment,” it noted.
However, the World Bank warned that Fiji’s fiscal position remained under strain.
The report said Fiji’s budget deficit widened to four per cent of GDP in 2025 due to expansionary spending measures introduced to support the economy amid global uncertainty. Public debt also remained the highest in the Pacific region at around 79 per cent of GDP.
Despite inflation falling into negative territory during 2025 as fuel and food prices eased, the World Bank cautioned that those gains may not last.
“Entering 2026, higher delivered fuel and freight/insurance costs could reverse disinflation,” the report warned.
The report also highlighted that Fiji households were still dealing with the long-term effects of high living costs accumulated over recent years.
“Living standards may still reflect accumulated price increases,” the World Bank stated, noting that many wages across the Pacific had not fully kept pace with inflation.
