Global impact on Samoa's economy may be delayed
Samoa may take a delayed hit from the global economic downturn as declining global trade begins to bite at the end of the month, an Economist says.
The closure of international borders combined with an impending coronavirus-led global recession are certain to impact Pacific economies but more slowly than elsewhere in the world, Dr. Robert Kirkby from Victoria University says.
New figures from the Central Bank of Samoa (C.B.S.) show that retail inflation has held broadly steady with the Consumer Price Index for March reaching 3.8 per cent, or just above the Bank’s 3 per cent target.
Prices for food and non-alcoholic drinks have gone up 1.7 per cent since February and prices on water, power and gas have dropped 0.6 per cent, the figures show.
With significant Government subsidies leading to reductions in the price of power and water from April until September, Dr. Kirkby suggests inflation may even decrease more slowly next month.
But the economist suspects the C.B.S. are unlikely to try to rein in the rate of inflation against the backdrop of a likely recession and so long as they remain close to their targets.
“The Central Bank doesn’t control prices perfectly. They tend to be happy with anything that is within half a percent and okay with anything within one per cent of that.
“I think they would think 3.8 per cent is pretty good. [It’s] not great and I think they would prefer it be closer to three, but I don’t think they would be worried.”
As the global economy takes hit after hit stemming from the effects of the COVID-19 pandemic, Samoa should be keeping an eye on food prices affected by troubles in the trade industry affecting its C.P.I., Dr. Kirkby warned.
Samoa’s major trading partners - New Zealand, Australia and the United States of America - only implemented major shut down measures against COVID-19 in mid to late March. That means the real effects of global disruption on Samoa’s economy may only be realised next month, Dr. Kirkby said.
Transport prices have dropped 0.5 per cent from March last year, which may be an early indication of the effects of oil and diesel prices dropping globally.
But one commodity that has registered a market increase in price is chicken, which has gone up nearly an entire tala since last March, and $0.31 sene since February, costing $5.12 last month.
The rise comes following reports from local wholesalers of supply shortages and disruptions to their usual supply lines.
Meanwhile other import staples like raw sugar and bread (from imported flour) have remained stable in the last three months compared to this time last year.