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Services sector propels Fiji's economic activity

Filipe Naigulevu
Saturday, December 02, 2017

THE country's economic activity continues to be propelled by the services sector particularly the tourism industry on account of higher visitor arrivals.

This was the latest update issued by the central bank this week while announcing the unchanged monetary policy stance.

The Reserve Bank of Fiji board at its monthly meeting on November 30 has maintained the Overnight Policy Rate at 0.5 per cent.

And while domestic real sector outcomes were mixed so far, RBF Governor Faizul Ariff Ali said aggregate demand conditions had remained firm, largely underpinned by buoyant consumption and investment activity.

"Over the month, positive outturns were noted in the cane and sugar sectors, visitor arrivals, as well as electricity and fish production. Contrastingly, output in the cement, gold and timber industries contracted cumulative to October," Mr Ali said in a statement.

"Supported by expansionary fiscal and monetary policies and improved labour market conditions." Mr Ali said the prevailing ample liquidity situation and low interest rate environment were also conducive to growth and the overall financial system remained sound.

He noted that the twin objectives of monetary policy remain intact and the outlook was also favourable.

Looking at the external front, Mr Ali said the near-term outlook for global economic conditions also remained upbeat as performances in the Euro zone, Japan, the US and China strengthened further.

However, this clouded by downside risks stemming from the rise of protectionism in the US, the pace of US interest rate hikes, China's rebalancing process amid a cooling housing market and uncertainties around the Brexit negotiations.

"The negative impacts from any sharp increase in prices of imported oil and food commodities and weather related shocks remain a concern," Mr Ali said.

Against this backdrop, Mr Ali has reiterated the importance of reining in the trade deficit, growing tourism earnings and remittances and attracting foreign direct investment to safeguard future external stability.

Foreign reserve holdings as of November 30 stood at $2,311.0 million, sufficient to cover 5.5 months of retained imports of goods and non-factor services.

The central bank has forecasted that year-end levels would to remain comfortable at $2,268.0m equivalent to 5.4 months of retained imports of goods and non-factor services.

Meanwhile, in light of recent developments and the favourable outlook for the economy, Mr Ali stated that the current accommodative monetary policy stance remains appropriate.

The central bank, he said, would continue to monitor risks on the global and domestic fronts and align monetary policy accordingly.

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Code Inward TTs Outward TTs
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Exchange Rate updated on 23th, March, 2018

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