Press Release No. : 02/2023
Date : 23 February 2023
The Reserve Bank of Fiji (RBF) Board at its meeting today, decided to hold the Overnight Policy Rate (OPR) at 0.25 percent.
On the global front, given the resilience shown in many economies and the moderation of adverse risks, the International Monetary Fund, in its January 2023 World Economic Outlook report, projects the world economy to expand by 2.9 percent this year, slightly higher than the 2.7 percent forecast in October 2022. China’s reopening is anticipated to boost global economic growth, mainly through supply chain improvements and increased demand for international trade and travel. Together with India, both economies are estimated to contribute to half of the global economic growth in 2023. Global headline inflation has been declining recently after peaking in late 2022, as international energy and food prices have moderated due to weak global demand while tighter monetary policy conditions continue to cool inflationary pressures.
Latest developments in the local economy indicate improving demand, primarily from higher-than-anticipated tourism demand, consumption activity and optimistic business and retail trade outlook. In January, Fiji received 67,502 visitors (the highest January arrivals on record), surpassing January 2019 levels by 5.8 percent (or 3,695 visitors), with higher arrivals noted from Australia, New Zealand and Canada.
Sectoral performances were generally positive in the review period. In line with economic activity, labour market conditions are improving, as shown by the number of jobs advertised in the month of January, which was higher by 59.3 percent compared to last year. However, the labour market remains tight with increased employment opportunities and migration. Partial indicators (Net VAT collections, electricity consumption) portray firm consumption activity, supported by higher consumption loans, increased personal remittance inflows and growth in formal employment.
The RBF’s latest Retail Sales Survey reveals that retail trade is anticipated to expand by 6.4 percent in 2023 after an estimated growth of 15.4 percent last year. In addition, sentiments conveyed in the December 2022 Business Expectations Survey (BES) were generally positive, with expectations for business conditions to improve in the short to medium term with improved intentions to employ more workers and invest in plant & machinery.
Financial conditions remained supportive, evident by the ample liquidity in the banking system ($2,452.4m as at 22 February), which aided in keeping interest rates at historic lows and continues to stimulate private sector credit growth.
Regarding the RBF’s twin objectives, annual headline inflation in January moderated to 2.5 percent, the lowest level since February 2022, and lower than 3.1 percent recorded a month earlier. Imported inflation, which accounts for most of the price increases, has consistently moderated from its highest level in August 2022 and contributed 2.1 percentage points to the overall headline inflation in January. Foreign reserves on 23 February stood at $3,372.7 million and remain sufficient (equivalent to 6.2 months of retained imports cover).
After reviewing the recent global and domestic economic developments, the balance of risks and considering the comfortable outlook for inflation and foreign reserves, the Board regarded the current accommodative monetary policy stance as appropriate, with room to support Fiji’s economic recovery. In the meantime, the Board will continue to monitor and assess economic conditions and align monetary policy accordingly.
RESERVE BANK OF FIJI
For further details, please contact:-
Communications Office
Telephone: (679) 3223 381 Email: info@rbf.gov.fj
Mr Mervin Singh – Manager Corporate Communications
Telephone: (679) 3223 229 Email: mervin@rbf.gov.fj