ANZ's Economist provides outlook for Samoa
While Samoa’s fiscal recovery from Cyclone Gita and Yazaki Samoa’s closure has been good, the nation needs to continue its growth.
That's the opinion of ANZ Bank's Pacific Islands Economist, Dr. Kishti Sen.
He said 2019 has been a “rebound” year for Samoa with public infrastructure works driving up the country's gross domestic product (G.D.P.).
The Tui Samoa Cable, the construction of the new prison at Tanumalala and the Apia Waterfront Development Project have contributed too, with the latter looking to continue driving the G.D.P. up until its planned completion in 2026.
Dr. Sen expects non-food and beverage manufacturing to increase by 15 per cent in this year, and projects remittances to reach an “all-time high".
Between July and April, Samoa had seen T$452 million in remittances, up 13.4 per cent from last year.
“So with $45 million per month on average, add $90 million to that and you’re looking at $542 million in remittances for this financial year. That is a big number,” said Dr Sen.
And he does not underestimate the impact of the Pacific Games on the economy either.
Dr. Sen predicts G.D.P. will rise by 3.7 per cent next year, calling his guess a “conservative estimate".
Government is suggesting closer to five per cent, he added.
“The last time Samoa hosted a major event was in 2016, the Commonwealth Youth Games, and the rugby match between the Manu Samoa and the All Blacks,” he said, which resulted in G.D.P. growth of approximately 7.5 per cent.
Dr. Sen predicts that after 2020, the trend will eventually return to growth of just above 2 per cent per year.
Samoa’s emergence in the "meetings" market will help, with more international organisations and multilateral meetings being hosted here. Forum Ministers meetings, the Africa Caribbean Pacific meetings and climate conferences all provide “significant stimulus” to the economy, Dr. Sen said.
He believes the 2019/2020 budget shows Samoa is maintaining a ‘live within your means’ philosophy and does not wish to borrow any more. The national debt to G.D.P. ratio has dropped from 50 to 49 per cent and Government plans to reduce it to 40 per cent in the next few years.
“Why does the Government want to do it? Because it wants to be prepared for the next shock that hits the country,” Dr Sen said.
But Samoa needs to strive for at least four per cent growth each year, Dr. Sen said.
“I don’t think Samoa should be happy with 2.5, three per cent growth every year, because Samoa, like other Pacific Islands, is a developing country and needs to do more.
“That is the best hope of creating employment opportunity.”
Tourism could be Samoa’s answer to higher growth rates, and with Fiji becoming more expensive, now is the time to develop and “pinch market share,” Dr Sen said.
“Government is taking too much money out of the tourism industry, jacking up taxes on alcohol, cigarettes, introducing environmental climate adaptation levies, $200 is the departure tax in Fiji.
“It is becoming quite expensive and Samoa can come in and pinch market share from Fiji and become even better than Fiji.”
He said with a coordinated approach across government sectors and the private sector, tourism could grow massively within just two or three years.
With all the existing infrastructure like accommodation, roads and increasingly fast internet in place already, Samoa should invest more in marketing and training the hospitality sector, Dr Sen said.
Dr. Sen uses the Government of Samoa G.D.P. estimates, which are published by the Samoa Bureau of Statistics.