A.D.B. forecasts heavy economic headwinds
Pacific island states including Samoa, but also Palau, Samoa and Fiji will likely feel the largest brunt of the economic impact of the coronavirus economic-led downturn, analysis by the Asian Development Bank reveals.
The report, released on Friday, conservatively estimates a three-month shutdown in international travel. Such an interruption, it projects, would result in a major contraction across all Pacific states which rely on tourism for exports.
The Bank’s flagship annual report "Asian Development Outlook 2020" contains the estimates and suggests Pacific economies are expected to contract by an average of 0.3 per cent this year due to interrupted tourism and trade and cancelled construction projects.
The Bank projects an optimistic average recovery in economic output of 2.7 per cent per cent on the assumption that tourism, construction projects, labour mobility and construction projects resume.
Last Financial Year, according to official figures from the Central Bank of Samoa the nation’s total economic output grew in nominal terms by 5.7 per cent in what was a largely tourism-led recovery from years of sluggish growth.
The Bank expects Samoa’s economy to recover to Samoa’s economy to drop 3 per cent this year but to rebound into positive territory with 0.8 per cent growth in 2021.
A number of Pacific states have announced stimulus packages in anticipation of the economic downturn, which analysis by the A.N.Z. bank has found could lead to the loss of nearly one-in-five jobs in Samoa.
An announcement by Samoa’s Finance Minister, Sili Epa Tuioti, is expected on Samoa’s economic response on Tuesday.
“While most Pacific countries moved quickly and decisively to restrict travel from a fast- growing list of COVID-19 affected countries, such restrictions can come with a high economic cost,” said the A.D.B’s. Director-General for the Pacific, Leah Gutierrez.
“A.D.B. is committed to supporting the Pacific cope with the COVID-19 pandemic and help address immediate needs. We are providing grant financing and support to procure needed medical goods and equipment in selected countries. We are also working with Ministries of Finance to assess their budget support needs and coordinating on these closely with other development partners.
“Strengthening social protection will be key to safeguarding vulnerable groups during this downturn and will also help support the eventual recovery process.”
Fiji announced an economic stimulus package worth USD $400 million last week but opposition figures have said the total is about three-quarters composed of fee and taxation waivers rather than Government investment in the economy.
Established in 1966, the A.D.B. is owned by 68 members, 49 of whom are from the broader Asia-Pacific region.