By Shymal Kumar
The Reserve Bank of Australia (RBA) has increased the cash rate target by 25 basis points to 4.60 per cent.
Fijian businessman Div Damodar has said that because Australia is Fiji’s primary economic partner, the decision has direct consequences for Fiji’s local economy.
Damodar provided a breakdown of how key Fijian sectors could be affected, what needs to be done to mitigate the risks, and what could happen if they fail to adapt.
Pointing to the tourism sector, Damodar said:
“Higher mortgage repayments mean Australian households have less disposable income. Australian families may trim holiday budgets, choose shorter stays, or defer overseas travel altogether, reducing tourist arrivals and resort spending in Fiji.”
On the impact on the remittance sector, Damodar said the Fijian diaspora and seasonal workers in Australia face higher living and debt costs. This could reduce personal savings, leading to lower monthly cash transfers being sent home to families in Fiji.
On the importation sector, Damodar added that Australia is a major supplier of Fiji’s food staples, consumer goods and raw materials.
“Cost pressures in Australia drive up the landed prices of imported goods, fuelling domestic inflation at local supermarkets and businesses.”
Outlining what Fiji must do to mitigate these risks across the three sectors, Damodar said that for tourism, Fiji should “pivot marketing toward value-conscious travel packages, while aggressively expanding promotional reach into secondary markets (New Zealand, North America, and Asia).”
On remittances, Damodar said:
“Lower the cost of receiving transfers by scaling low-fee digital wallets and offering structured investment channels for diaspora funds.”
For imports, Damodar added:
“Diversify sourcing to alternate trading partners and substitute imported produce with locally grown Fijian agriculture wherever possible.”
Addressing the risks and consequences of inaction, Damodar said that failure by key Fijian sectors to adapt could result in slower economic growth.
“Reduced tourist expenditure directly impacts hospitality employment and local supplier revenue,” he said.
Pointing to the cost-of-living squeeze, Damodar stated that unchecked import costs could push domestic retail prices higher for average Fijian households.
He also highlighted pressure on foreign reserves, saying:
“Declining service exports and remittances paired with high import bills strain Fiji’s current account balance.”
Australian Treasurer Dr Jim Chalmers MP said the war in the Middle East is pushing up inflation and interest rates around the world, but that does not make the situation any easier for Australians.
“Australian workers didn’t choose this war, but they are paying a hefty price for it. The war has been a disaster for the global economy. The market is pricing in multiple rate rises in every major advanced economy,” Chalmers said.
“While today’s decision was widely expected and anticipated, that doesn’t make it any easier.”
Chalmers added that inflation is much lower than its peak but remains higher than the government would like, while the conflict in the Middle East is making inflation persist for longer.
He said the government is focused on taking pressure off Australians and addressing inflation while building a more productive and resilient economy and managing global uncertainty.
Chalmers said the RBA’s decision demonstrates why these priorities are important.
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