Visitor arrivals grow in May, annual inflation rate softens to 0.1% and tight labour conditions ease - RBF

Visitor arrivals grew in May by 4.4 percent compared to the same month a year ago according to the Reserve Bank of Fiji.

However, in the first five months of 2025, total visitor arrivals noted an annual contraction of 1 percent as travellers from Fiji’s key source markets such as Australia (-2.7 percent) and New Zealand (-8.1 percent) declined, more than offsetting the increase from the Pacific Island countries (17.2 percent) and the United States (11.1 percent).

The RBF says the performance of resource-based sectors continues to improve except for gold production which has been impacted by industry specific challenges.

The Reserve Bank adds the monitored indicators show strong consumption activity supported by higher income, inward remittances and new lending by commercial banks for consumption purposes.

Investment activity notes a gradual improvement but continues to be weighed down by elevated costs of doing business and regulatory hurdles.

Tight labour market conditions experienced in recent years have eased, mitigated by lower resident departures and increased intake of foreign workers.

Governor and Chairman of the RBF Board, Ariff Ali says the RBF’s monetary policy objectives of maintaining price stability and ensuring an adequate level of foreign reserves continue to be effectively met.

He says growth in the annual inflation rate softened to 0.1 percent in May from the 5.8 percent registered a year ago.

Ali says the softening is mostly driven by comparatively lower food and fuel prices which slightly offset the higher prices for kava and alcoholic beverages.

Foreign reserves are around $3.7 billion, sufficient to cover 5.8 months of retained imports of goods and services and are projected to remain adequate in the medium term.

The Chairman adds that the financial sector remains conducive to economic growth with ample system liquidity of $2.1 billion.

Ali says the sustained low lending rates supported by the RBF’s accommodative monetary policy stance, have aided growth in private sector credit (9.6 percent) in May.

Governor Ali states that the decision to maintain the Overnight Policy Rate is supportive of the 3.2 percent growth forecast for 2025 and acknowledged that external risks such as the ongoing trade and geopolitical tensions that can weigh on the outlook for economic growth and RBF’s twin objectives.