IMF Predicts Slower Economic Growth for Fiji in 2026

Fiji's economy is projected to experience slower growth this year, with the International Monetary Fund (IMF) forecasting a 2.4 percent expansion for 2026, a decrease from the 3.2 percent growth recorded in 2025. Dr. Giovanni Ganelli, the IMF's Regional Representative for Pacific Island Countries, cited global uncertainties and rising oil prices as key factors weighing on the economic outlook.

Despite global challenges, Fiji demonstrated resilience in 2025, bolstered by a strong performance in tourism, robust external demand, and government spending. However, Dr. Ganelli noted that a softening in tourism demand, coupled with broader global instability and elevated oil prices stemming from the conflict in the Middle East, are expected to dampen economic activity in the current year.

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So if the global growth ends up being lower than what we assume in the reference scenario, then this will negatively affect the Pacific region and Fiji through various channels, including trade, tourism, and the cost of living. So, if this risk, the outlook, materializes, growth in Fiji could actually end up being lower than the 2.4%, which we mentioned in the report, and inflation could end up being higher than the 3.8%.

Adding to these concerns, the IMF anticipates inflation to increase to 3.8 percent, a significant rise from the near-zero levels observed last year. Dr. Ganelli cautioned that a prolonged conflict and persistently high oil prices could exacerbate these trends, leading to further reductions in economic growth, increased inflation, and higher costs of living for Fijians.

Beyond external factors, Fiji faces domestic challenges including a growing public debt, labor shortages, outward migration, infrastructure deficits, and vulnerability to natural disasters. The IMF advises Fiji to carefully balance support for households struggling with the cost of living against the need to strengthen public finances. Recommendations include well-targeted, budget-neutral fiscal responses to oil shocks, a shift in spending towards public investment, and the establishment of a medium-term fiscal framework with a debt target to support fiscal consolidation. Sustained long-term growth, the IMF suggests, will require greater investment in infrastructure, climate resilience, and skills development.

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The IMF view is that the fiscal response to the oil shock should be well-targeted and budget-neutral, and fiscal adjustment in the medium term should be growth-friendly, shifting spending toward public investment.