Escalating global tensions, particularly in the Middle East, are casting a shadow over Fiji’s economic outlook, with the Asian Development Bank warning that external shocks could disrupt tourism, drive up fuel prices and slow overall growth.
ADB has projected a slowdown in Fiji’s economic growth over the next two years, citing tourism headwinds, global uncertainty and domestic constraints.
In its Economic Forecasts for Asia and the Pacific: April 2026 report released on Friday, the ADB said growth was expected to ease to 2.9 per cent in 2026 and 2.7 per cent in 2027.
“Growth is projected to slow… as the slowdown in visitor arrivals in 2025 is likely to carry over into 2026,” the report stated.
Tourism, a key pillar of Fiji’s economy, is showing signs of strain, with the ADB highlighting increasing price competition from other destinations, as well as limited airline and hotel capacity.
“Tourism remains vital to the economy but is showing signs of slowing,” the report noted.
It also said external risks, including geopolitical tensions in the Middle East, would continue to create uncertainty.
“These projections are subject to a high degree of uncertainty,” the ADB said.
The report said further pressures on tourism included travel advisories, stricter US visitor visa bond requirements, expected interest rate hikes by the Reserve Bank of Australia, and new domestic policies such as the Commercial Use of Marine Areas Act.
Despite these challenges, the ADB said there were some buffers, including promotional efforts by Tourism Fiji, growing interest from the Canadian market, and increased Airbnb activity.
Construction activity is also expected to remain subdued, with rising costs of building materials and cautious investor sentiment ahead of upcoming elections slowing new project activity.
The report noted that building material costs had risen significantly in recent years, contributing to delays in construction and investment decisions.
Inflation is projected to rise to 3.3 per cent in 2026 before easing to 1.9 per cent in 2027, driven largely by higher food and fuel prices linked to global uncertainties.
While Fiji’s economic outlook remains positive, the ADB stressed that both domestic and global factors will play a critical role in shaping the pace of recovery in the coming years.
