The Reserve Bank of Fiji’s partial indicators for consumption and investment activity revealed a slight slowdown when compared to a year ago.

The RBF’s Economic Review for March highlighted this but stated despite the slowdown, investment activity still remained above trend.

It said growth for this year is expected to be driven by significant post-cyclone reconstruction work and strong retail and tourism activity.

“Consumption and investment spending are anticipated to remain buoyant,” RBF said.

“This is supported by higher aid inflows and personal remittances, cyclone-related assistance including withdrawals from the Fiji National Provident Fund and various credit facilities provided by financial institutions.”

In addition, it said financial conditions remain conducive for economic growth as money and credit aggregates expanded further in the review month.

Broad money grew by a higher 15.2 per cent in February 2016, from a growth of 14.9 per cent in January.

Sectoral performance

The RBF stated recent partial indicators reveal mixed performances across sectors.

“For the timber industry, mahogany production increased (19.9 per cent) while production of woodchips declined (-47 per cent) in the year to February,” it said.

“In the same period, electricity generated by the Fiji Electricity Authority was higher by an annual 3.8 per cent.

“Visitor arrivals cumulative to February also rose by 10.5 per cent led by higher tourists from New Zealand, Australia, China and the United States (US).”

New vehicle registrations fell (-2.4 per cent) while second hand vehicle registrations increased (1.6 per cent) in the year to February.

The growth in new consumption loans slowed to 4.2 per cent in February, as reduced credit to wholesale, retail, hotels & restaurants (-7.7 per cent) offset the increase in loans to private individuals (49.1 per cent).

New loans for investment purposes, however, registered an annual contraction of 29.2 per cent in February, led by a decline in both the real estate (-43.6 per cent) and the building & construction (-7.5 per cent) sectors.

Labour market

Meanwhile, the RBF said labour market conditions continued to be favourable as indicated by the latest Reserve Bank of Fiji’s Job Advertisements Survey results.

“In the year to February, the number of vacant jobs advertised was higher by 0.9 per cent,” it said.

“This was underpinned by the electricity & water, wholesale, retail, trade & restaurants & hotels, construction and manufacturing sectors.”

Liquidity and inflation

Bank liquidity rose over the month in February to $581.1 million, led by an increase in foreign reserves ($6.7m). Currently (29 March), liquidity remains sufficient at around $552.0 million.

Meanwhile, inflation increased to 1.2 per cent in February, from 0.2 per cent in January, underpinned by the education, food & non-alcoholic beverages and alcoholic beverages, tobacco & narcotics categories.

In the months ahead, prices are expected to pick up temporarily owing to shortages in supply of agricultural market produce following Tropical Cyclone Winston.

Nevertheless, inflation this year is forecast to be largely subdued supported by weak global fuel prices and low trading partner inflation.

Foreign reserves increased over the month in February to $2,018.4 million, equivalent to 5.7 months of retained imports of goods and non-factor services.

As at March 31, foreign reserves were at $2,009.5 million, sufficient to cover 5.6 months of retained imports of goods and non-factor services.

Given the stable outlook for its monetary policy objectives, the Reserve Bank Board kept the Overnight Policy Rate at 0.5 per cent in March.

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