Fiji's central bank maintained its overnight policy rate (OPR) steady at 0.5 percent, saying a soft global economic climate means growth has to be driven by domestic forces and the current policy stance remains appropriate and complementary to the government's policy initiatives.
The Reserve Bank of Fiji, which has maintained rates since December 2011, said consumption and investment activity remain buoyant, supported by adequate liquidity and low interest rates.
“The growth forecast for 2014 is now expected to be higher than the 3.0 percent estimated prior to announcement of the 2014 National Budget and commended Government for the increased capital expenditure and the continuation of the structural reforms,” said the bank's governor, Barry Whiteside.
In October the central bank revised upwards its forecast for growth this year to 3.6 percent, up from a forecast of 3.2 percent in August, and also raised its 2014 growth forecast to 3.0 percent from an earlier 2.5 percent. In 2012 Fiji's Gross Domestic Product grew by an estimated 2.2 percent.
Higher government spending will boost imports and this will pose a downside risk to Fiji's balance of payments next year, but Whiteside added that foreign reserves are at record highs and expected to remain comfortable.
Fiji's foreign reserves were US$1.870 billion, up from $1.783 billion in September, sufficient to cover 5.1 months of imports, the bank said.
Fiji's inflation rate rose to 3.3 percent in October from 3.1 percent the previous month, largely due to higher prices of certain food and alcohol items.
The Reserve Bank forecast year-end inflation of 3.0 percent in October.