THE Reserve Bank of Fiji believes the economy is on track to grow 2.7 per cent this year because of the economic performance in the first six months.
While releasing its economic review for the month of August, the central bank said that despite the heightened risks in the global economic, the domestic real sector outcomes were generally positive in the review period. Its view is based on the latest data, which revealed improved performances in gold and cement production although domestic cement sales declined marginally because of the completion of the Nadarivatu Hydro project in April this year.
The tourism industry is also at peak, evident by travel related cash receipts which rose by around 7 per cent annually in the first seven months of the year.
"Moving forward, the industry is expected to pick up further in the remaining months of 2012. While electricity production declined, this outcome was generally driven by power outages in April and electricity conservation measures due to higher tariffs," the bank said.
Consumer spending continued to grow because of more take home pay by workers and an annual increase of Value Added Tax Collections by 13.4 per cent for the first half of the year.
Commercial banks' new lending for consumption purposes also rose, by $85.6 million or 161.4 per cent, on a yearly basis in July.
The bank also noted an increase in the number of residential houses sold in the second quarter, which it felt suggested that improved household wealth, job prospects and confidence had encouraged more people to purchase homes. New lending for investment purposes registered a year-on-year growth of 12 per cent ($5.8 million) in the year to July.
In addition, the number of building permits issued in Quarter 1 2012 — a forward looking indicator of construction activity — rose by 14.7 per cent to 344, valued at $43.5 million, while the total value of work put-inplace by the construction sector increased annually by 7.5 per cent to $68.0 million.
"Investment activity is expected to strengthen further in the second half of this year, supported by the pick-up in government capital projects and several major private investment activities. Consequently, investment in 2012 is envisaged to be around 18 per cent of GDP, up from 16 per cent estimated for 2011," the RBF said.