Fiji’s economic growth forecast for 2026 has been slashed to 1.5 per cent from an earlier 3.0 percent as rising global conflicts, soaring fuel prices and growing economic uncertainty weigh on the country’s outlook.
Speaking on behalf of the Macroeconomic Committee, chairman Ariff Ali said escalating tensions in the Middle East had significantly increased global risks, driving up oil prices and adding pressure to an already fragile international economy.
“Global risks have risen sharply in recent months, driven by escalated conflict in the Middle East,” Mr Ali said.
He said concerns over potential disruptions to shipping through the Strait of Hormuz, a critical route for global oil and fertiliser supplies, had affected economic activity worldwide and contributed to higher food and fuel costs.
According to Mr Ali, Fiji was feeling the impact through higher production and transportation costs, rising consumer prices and reduced household purchasing power.
“Consumer prices have risen sharply in the past few months,” he said, noting that inflation increased to 3.9 per cent in May from -3.8 per cent in September last year.
He said inflation was now expected to exceed six per cent by the end of the year, driven largely by imported fuel and food prices.
While remittances remained strong, Mr Ali said there were signs that consumers were becoming more cautious with spending as living costs increased.
“This shift is reflected in the latest Reserve Bank of Fiji Retail Sales Survey, where businesses project retail sales to grow by 2.0 per cent in 2026, much lower than the 6.8 per cent expected in the August 2025 survey,” he said.
Mr Ali also pointed to a slowdown in tourism growth, with visitor arrivals expected to increase at a slower pace than previously forecast due to reduced flight frequencies, concerns over energy security and tighter monetary conditions in key markets such as Australia.
As a result, the Fiji economy is now projected to grow by 1.5 per cent in 2026, down from the 3.0 per cent forecast issued in November last year.
“The duration and severity of the current crisis, and its implications for both the global and domestic economies remain unclear,” Mr Ali said.
Despite the weaker outlook, he said Fiji’s external position remained manageable, with foreign reserves standing at about $3.4 billion as of June 9, sufficient to cover approximately 4.7 months of retained imports.
Looking ahead, the economy is forecast to grow by 2.5 per cent in 2027 before returning to its longer-term trend of around three per cent in 2028, with tourism expected to remain the main driver of growth.
Mr Ali said the Macroeconomic Committee would continue to monitor global developments and economic data closely before revisiting its projections later this year.
