RBF governor: Fijian economy projected to expand
26 November, 2022, 8:08 pm
The Reserve Bank of Fiji (RBF) board has agreed to maintain the Overnight Policy Rate at 0.25 per cent in its monthly meeting held November 24.
The RBF has also projected economic growth and the receding of inflation.
The governor and chairman of the board, Ariff Ali, stated that “domestic economic activity continues to be resilient against global headwinds, supported by the impressive recovery in the tourism and service-related industries”.
Mr Ali added the associated rebound in aggregate demand remained solid, driven by the robust growth in employment and inward remittances.
Latest partial indicators of consumption, such as net VAT, had surpassed pre-pandemic levels while PAYE and formal employment have almost recovered to pre-crisis levels, he said.
“The financial sector is also supportive of growth as credit to the private sector continues to expand amid high liquidity levels and relatively low lending rates. Given these developments, the economy is projected to expand by 15.6 per cent this year and 6 per cent next year.”
Mr Ali also highlighted higher imported energy and food prices led to a pick-up in inflation to 5.4 per cent in October.
According to the RBF, inflation is projected to subside to around 5 per cent by year-end and drop to 3 per cent by the end of 2023 as the constraints affecting global food and energy supplies are expected to dissipate.
Foreign reserves are at $3,439.7 million (as of November 24, 2022), sufficient to cover seven months of retained imports of goods and services, while the reserves coverage over the medium term is projected to be above the benchmark of four months.
The chairman has cautioned that despite the projected data the economic outlook remains precarious, given the broad-based deceleration in the world economy and the continued global geopolitical tensions, which can negatively impact our monetary policy objectives and the economic recovery moving forward.