Samoa’s economy recorded a historical-high recession in Financial Year 2021.
This is according to a World Bank report on the economies of Samoa, Tonga, and Vanuatu which have been hit by multiple shocks, including natural disasters, the COVID-19 pandemic, and the war in Ukraine.
“Governments need to continue supporting the vulnerable and embark on structural reforms to support inclusive economic recovery.”
The World Bank says the border closure for Samoa resulted in a sharp contraction of tourism and related industries and hindered construction activity.
“Despite policy support and robust remittances, real GDP contracted by 7.1 per cent.
“Inflation tanked to a historical low of -3.0 per cent amid the economic slowdown but has been soaring in recent months. Poverty, measured against national standards of living, is likely to have risen from the latest pre-pandemic rate of 22.7 per cent (2018), with urban areas affected more due to the higher concentration of jobs in the services sector.
“Substantial development partner grants, spending under-execution, and favourable tax revenue outturn, reflecting improved tax compliance helped attain a fiscal surplus of 2.2 per cent of GDP.
“The current account recorded a substantial deficit (14.3 per cent of GDP) as tourism receipts came to a standstill.”
Furthermore, Samoa’s economy is projected to contract further by 5 per cent in FY22, driven by the continued border closure and the domestic COVID outbreak in March 2022.
“Nonetheless, a gradual recovery is projected from FY23 onwards with growth averaging 3.3 per cent in FY23-24.
“The rebound is expected to be driven by a gradual resumption of tourist activity, spillovers to other sectors, and ramping up of capital projects. Inflation is estimated at 8.8 per cent in FY22 as supply-related shocks to commodity prices continue.
“A modest average fiscal deficit of 1 per cent of GDP is projected from FY22-24, supported by a gradual withdrawal of fiscal stimulus and the economic recovery.
With the slow recovery in tourism, the current account deficit is projected to remain elevated in FY22 before narrowing over the medium term.”
