ANZ has released its quarterly economic update and has banked on tourism projects and government capital projects to also drive the construction industry and provide support for the economy, in line with what the central bank alluded to this week.
"The Reserve Bank of Fiji is expected to keep monetary policy unchanged going forward with real domestic indicators remaining positive and inflation stabilising," the review said.
"Momentum is expected to pick up as effects from the January floods subside.
Seasonal industries such as sugar and tourism are expected to be strong drivers for growth while an active pipeline of construction projects should provide support for the economy."
The report said visitor arrivals have softened, growing by 3.7 per cent on year on year basis in the first quarter.
Real sector activity was also strong with gold and cement production increasing by 13.9 per cent year on year and 5.2 per cent year on year (y/y) respectively in the first five months.
Business investment indicators continued to paint a mixed picture. New lending for investment was higher by $41.4m in the first five months of 2012 compared to 2011, in contrast to domestic cement sales which were sluggish and dipped 2.2 per cent y/y.
However, encouraging survey results show expectations of increased investment in plants, machinery and buildings through the remainder of 2012.
Consumption activity picked up with annual growth in Value Added Tax collections increasing 18.7 per cent y/y. This likely also reflects earlier fiscal policy adjustments taking effect. Although overall lending grew by only 8-9 per cent y/y, new lending for consumption rose 88.4 per cent y/y for the period January - May.
The June inflation eased to 4.5 per cent y/y from 4.7 per cent and 6.4 per cent the previous two months.
"This is due largely to the normalisation of agricultural prices after the floods in January caused a supply crunch," the report said.