‘Comfortable level’ – Domestic economic activity improving from Delta setback – RBF

RBF would conduct the survey in partnership with the Fiji Bureau of Statistics (FBoS), the United Nations Capital Development Fund managed by the Pacifi c Financial Inclusion Programme (UNCDF-PFIP) and the Alliance for Financial Inclusion (AFI). Picture: FILE

The Reserve Bank of Fiji (RBF) says the domestic economic activity is improving from the setback caused by the outbreak of the Delta variant as an increasing national vaccination rate has allowed for the further easing of COVID-19 related restrictions.

In a statement, RBF governor Ariff Ali said while the economy was still expected to record a small contraction in 2021, several partial indicators recorded monthly improvements in September after the COVID-19 induced slump that began from the second quarter of 2020.

“This included monthly growth in the production of electricity, cement, mineral water, gold, sawn timber, wood chips and mahogany. Consumption activity has also picked up, evident from higher net VAT collections and increased second-hand car sales,” said Mr Ali.

Another indicator of the gradual recovery is the monthly uptick in the number of job advertisements in the daily newspapers last month.

According to the RBF Job Advertisements Survey, the increase suggests that labour market and economic conditions are slowly improving.

Meanwhile, the bank also said while domestic inflationary pressures remain contained, for now, the surge in global commodity prices amid persistent supply shortages had filtered through to the prices of some goods and increased the contribution of imported inflation to overall headline inflation.

Mr Ali said with the increase accounting for elevated external price pressures, especially for energy and food, the RBF forecasts headline inflation to reach 2.0 per cent by the end of 2021 from -2.6 per cent at the end of 2020.

“Foreign reserves remain at comfortable levels at $3.1 billion, sufficient to cover 10.7 months of retained imports and are projected to remain adequate in the short to medium term.”

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