The economy is expected to grow by 15.6% in 2022 – RBF

The Reserve Bank of Fiji says based on the trend in arrivals in the past nine months and forward airline and hotel bookings for the remainder of 2022, this year’s arrivals are expected to rise to just above 581,000 visitors by year-end compared to the earlier projection of around 492,000.

They say the better-than-expected rebound in the Fijian economy has been largely underpinned by higher visitor arrivals which reached 426,934 by September or around 63.3 percent of the tourist arrivals in the same period in 2019.

RBF Governor and Chairman of the Macroeconomic Committee Ariff Ali says in light of the latest economic data and the feedback from various industry stakeholders, the Macroeconomic Committee has upgraded the GDP growth outlook for 2022 to 15.6 percent from the 12.4 percent expected earlier in June.

He says despite the remarkable growth this year, the economy will not return to pre-COVID level until 2024 as there has been permanent economic scarring, given the cumulative contraction of 22.1 percent over the last two years.

Ali adds there are also significant downside risks to the outlook, especially on the global front, such as ongoing geo-political tensions and their impact on food and energy prices, inflation-induced monetary policy tightening in advanced economies, the associated appreciation of the US dollar, coupled with the heightened risk of a global recession.

Ali also says domestically, climate change and natural disasters continue to remain inherent risks to the growth outlook.

Ali says in line with the visitor arrivals and tourism earnings, consumption spending was also boosted by the recovery in employment and continuous growth in inward remittances throughout the year.

He further says investment spending also picked up, albeit at a slower pace, due to the increased cost of construction and policy uncertainty around the upcoming general elections.

Ali adds the overall rebound in the economy has led to a pickup in tax collections and an improved fiscal position from which the Government’s expansionary stance will continue to support the economy.

He says the key sectors contributing to the growth this year will be accommodation & food services, transport & storage, administration & support services, wholesale & retail trade, agriculture, and net indirect taxes.

For 2023, growth is now envisaged to slow to 6.0 percent from the 9.2 percent expected earlier primarily driven by base-related effects.