Domestic demand keeps Fiji economy robust

Reserve Bank of Fiji – 

Recent data for the Fijian economy indicate that overall economic activity remains relatively strong supported by robust domestic demand and the economy is on track to achieve the 4% growth projected for 2015.

Latest available partial indicators revealed buoyant consumption activity.

Commercial banks’ new lending for consumption purposes grew by an annual 4% percent in the year to October, largely underpinned by increased lending to private individuals (45.7%).

Second-hand vehicle registrations increased by 44.5% cumulative to November. Imports of consumption goods also grew by an annual 3.3% cumulative to August.

Investment activity remained firm in the review period largely driven by strong growth in construction activity.

In the year to November, domestic cement sales rose by 44.9% on an annual basis, while new investment loans grew by 98.1% in the year to October.

The value of work put-in-place also registered a better outcome, increasing by 11.4% cumulative to September, led by growth in both private (9.5%) and public (14.2%) sector construction activities.

Imports of investment goods (excluding aircraft) grew by 3.1% in the year to August.

Boost to tourism

Real sector performances were mixed in the review period.

Recent data on industrial production highlighted positive outcomes in gold (9.7%), electricity (3.5%) and cement (18.9%) production cumulative to November. In the same period, visitor arrivals rose by 8.8%, led by higher arrivals from New Zealand (12%), US (9.5%), Australia (4.5%), China (40.9%) and Pacific Islands (24.4%).

Based on performance so far, it is highly likely that total visitor arrivals for 2015 will surpass 8% growth projected by the Macroeconomic Committee.

Likewise, sugarcane and sugar production also surpassed the Macroeconomic Committee’s projected declines of 2.8% and 2.6% respectively, despite the prolonged drought conditions.

Wood sector cut

As at November 23, 2015, cane production increased marginally by 0.4% while sugar output declined by 2.5%.  On the downside, mahogany logs and wood chip production declined by 8.5% and 9.7% respectively in the year to November.

In line with increased economic activity, developments in the labour market continue to be favourable.

Job opportunities

The latest Job Advertisements Survey of the Reserve Bank of Fiji showed that the number of vacancies advertised in the year to November increased by an annual 18.4%.

This reflected higher recruitment intentions in the agriculture, forestry & fishing; construction; mining & quarrying; wholesale & retail trade & restaurants & hotels; transport, storage & communication and the finance, insurance, real estates & business services.

Financial conditions remained accommodative during the review period.

The expansion in broad money (15.3%) was mainly driven by the growth in other deposits (19.1%) and narrow money (13.4%).

Net domestic credit grew by 12.8% in October, attributed by 14.8% growth in private sector credit.

The commercial banks’ weighted average new lending rate rose over the month to 6.98% from 5.53% in September.

During the same period, the existing time deposit rate fell to 2.59% from 2.63% in September, while the savings deposit rate rose to 1% in October from 0.87% in September.

Liquidity in the banking system fell slightly in November by 4.5% to $548.2 million, largely led by a decrease in foreign reserves.

As at December 29, 2015, liquidity was around $485.2 million.

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