Thursday, October 31, 2013

Fiji holds rate steady, revises up growth forecasts

    Fiji's central bank maintained its overnight policy rate (OPR) at 0.5 percent, unchanged since December 2011, and revised upward its forecast for economic growth this year and next year.
    The Reserve Bank of Fiji forecast growth of 3.6 percent this year, up from August's forecast of 3.2 percent, and 2014 growth of 3.0 percent, up from an earlier 2.5 percent forecast. Fiji's economy expanded by 2.2 percent in 2012 and the International Monetary Fund forecasts 3.0 percent this year.
    Despite this upward revisions, Reserve Bank Governor Barry Whiteside said the economy still needed support in light of the IMF's downward revision of its global growth forecasts and the bank's policy stance was maintained "given the comfortable outlook for the Reserve Bank's twin objectives (low inflation and comfortable foreign reserves)."
    Fiji's inflation rate rose to 3.1 percent in September from 2.5 percent the previous month, but the central bank still projects year-end inflation of 3.0 percent due "subdued global demand conditions and contained food and energy prices."
    Fiji's trade deficit widened due to higher imports and a slow recovery in exports, but the Reserve Bank said higher tourism earnings, remittances and inward investments supported the balance of payments' position with foreign reserves "comfortable" at $1.783 billion, sufficient for 4.9 months of imports, slightly down from around $1.834 billion at the end of August.


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