Westpac Fiji has confirmed the Reserve Bank of Fiji’s worst fears — that this year, our economy will not grow as strongly as it had officially projected.
In fact, the red bank is projecting growth this year to fall “below the historical trend of 2.5 per cent”, as “factors such as increased inflation, high outward migration and subdued growth in trading partner economies” converge to stifle domestic demand.
Things have developed very quickly since last November, when the RBF officially projected the economy to grow by 3.4 per cent this year, with services and industrial sectors driving growth.
Downside risks to that growth have now become prominent, as detailed by Westpac Fiji in Westpac Wave, its quarterly economic outlook for Fiji released yesterday, carrying the theme: “2024: Slowdown to below average.”
Investment, which the RBF had expected last November to fast-track from this year “due to more clarity on taxes and incentives, pent up demand from the pandemic and continuous improvements in the local business environment”, has slowed, “reflecting cautious sentiments,” according to Westpac Wave.
The bank’s outlook for Fiji for 2024 “holds promise amidst potential headwinds.”
“External uncertainties include elevated commodity prices, restrictive monetary policies, Ukraine-Russian conflict and Middle East crisis.
“As Fiji enters peak tourism, a potential drop in Australian visitors any further, lack of investment into accommodation alongside domestic risks like natural disasters and continued labour migration could hinder medium term growth outlook.”
Westpac Fiji’s report is the latest in a slew of economic reports on Fiji recently that are all projecting Fiji’s economic growth this year to be lower and weaker than the official estimates by the RBF.
