IMF warns Fiji growth slowing as debt risks mount

Fiji’s economy will grow at just 2.4 per cent this year – down from 3.2 per cent in 2025 – while inflation is forecast to climb to 3.8 per cent.

This was highlighted by the International Monetary Fund’s Regional Representative for Pacific Islands, Giovanni Ganelli at the State of the Fijian Economy Dialogue 2026 held at the Grand Pacific Hotel in Suva yesterday.

Mr Ganelli delivered the keynote address at the two-day dialogue, telling participants the slowdown reflected softer tourism demand, rising global uncertainty, and higher oil prices driven by the Middle East conflict.

“If the global growth ends up being lower than what we assume in the reference scenario, then this would negatively affect the Pacific region and Fiji through various channels, including trade, tourism, and the cost of living,” Mr Ganelli said.

He warned that if the conflict dragged on longer than expected, growth could fall below 2.4 per cent and inflation could exceed 3.8 per cent.

The IMF also flagged rising public debt as a key domestic risk, noting this year’s budget had reduced capital spending as a share of Gross Domestic Product (GDP), which “does not help growth prospects.”

He said IMF recommended Government’s response to the oil shock be “well-targeted and budget-neutral” – meaning any relief measures for households should not blow out government spending further.

Dialogue Fiji

Dialogue Fiji executive director Nilesh Lal said IMF’s own Article IV report – an annual assessment of a country’s economy – had found that “progress in reducing fiscal deficits was reversed” in the 2025-2026 budget.

“If they have sounded the warning bell in such a manner, that means we must really be in a dire situation,” Mr Lal said.