The Asian Development Bank, in its latest Pacific Economic Monitor, predicted 11.7% growth for the Fijian economy this year.
This is based on recent visitor arrivals and upcoming booking trends.
The AfDB report also indicates that tourism-related sectors contribute 10.7 percentage points to the projected growth rate for 2022, with spillovers to other sectors of the economy.
Visitor arrivals for June are nearly 73% of pre-COVID-19 levels, which was June 2019.
Australia tops the arrivals list with 97% of June 2019 levels, Canadian tourists at 80%, American tourists at 78% and New Zealanders two-thirds of pre-pandemic figures.
Tax revenue, which accounted for 85% of government revenue before the pandemic, has also increased.
It says value added tax collections increased by 48% in fiscal year 2022, while labor income tax increased by 7% as jobs are gradually restored.
The report says that as the recovery gains momentum, the impact of Russia’s invasion of Ukraine on commodity prices should offset nominal gains in economic activity and revenue collection .
Since November 2021, overall consumer prices have increased by 5.7% in six months, the highest level on record for the same period.
Price increases are dominated by categories related to food and fuels
In the first quarter of 2022, the value of imports of petroleum products increased annually by 72%, that of vegetable products by 41% and that of prepared foods by 41%, supported by both high import prices and improving demand conditions.
He adds that the second-round effects of higher prices are also transmitted downstream.
High fuel prices have led to higher bus fares in Fiji, while rising inflation has necessitated an increase in the national minimum wage to four dollars by January 2023.
The report says the Fijian economy is expected to grow by 8.5% in 2023 and 9.9% in 2024.