Thursday, July 30, 2015

Fiji maintains rate, economy on track for 4.3% growth

    Fiji's central bank left its benchmark Overnight Policy Rate (OPR) steady at 0.50 percent, saying the country's economy remains on track to reach the 4.3 percent growth forecast for this year while the bank's twin objectives remain intact.
   The Reserve Bank of Fiji (RBF), which has maintained its rate since November 2011, said the improved outlook for tourism and gold, and buoyant demand is supporting the growth outlook along with improved business confidence, continued credit demand and investment in projects.
    Downside risks are represented by a potential decline in government spending and weather-related hit to cane output, RBF Governor Barry Whiteside said in a statement.
    Fiji's economy expanded by 4.1 percent last year and the International Monetary Fund in April forecast 3.3 percent growth in 2015.
    Fiji's inflation rate rose to 0.8 percent in June from 0.6 percent in May, and Whiteside said he expects inflationary pressure to remain "subdued" due to modest growth in the country's trading partners because the expected pick-up in global growth has not yet materialized.
    Fiji's foreign reserves amounted to US$1.988.6 billion as of July 30 - equal to 5 months of imports -  from $1.987 billion as of June 30.

    The Reserve Bank of Fiji issued the following statement:

"The Reserve Bank of Fiji (RBF) Board at its monthly meeting on 30 July agreed to maintain the Overnight Policy Rate (OPR) at 0.50 percent.
The Governor and Chairman of the Board, Mr Barry Whiteside stated that on the international front, the expected pick-up in global growth has not fully materialised. As a result, Fiji’s trading partners’ recent growth outcomes have remained modest, with external inflationary pressures remaining subdued.”
Mr Whiteside noted that domestically, improved sectoral outcomes for tourism and gold and buoyant demand conditions are indicative of Fiji’s currently strong growth outlook. Improved business confidence as seen in higher recruitment intentions, combined with continued credit demand and ongoing construction and infrastructure projects confirm the robust investment activity to date. While potentially lower Government expenditure and weather-related impact on cane output present downside risks to this outlook, on balance, the Fijian economy is on track to achieve the 4.3 percent growth projected for this year.
The Governor also highlighted that the twin objectives of monetary policy remained intact, with the June inflation rate at a low 0.8 percent and the 30 July 2015 foreign reserves level adequate at $1,988.6 million (5.0 months of retained imports of goods and non-factor services cover).
The Chairman concluded that, “the Reserve Bank of Fiji will continue to monitor global and domestic economic developments and align monetary policy accordingly.”


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