Economic growth of 1.7 per cent forecast next year
The economy is projected to reach its bottom in 2021, but recover next year with a forecast growth of 1.7 percent, the International Monetary Fund (I.M.F.) has projected in a new report.
The projections were publicized in a 19 March statement from the I.M.F. announcing the completion of its Article IV Consultation with Samoa.
Samoa has shown resilience to past economic shocks, underpinned by the authorities’ strong commitment to supporting the economy, and financial assistance provided by the international community, the statement says.
“Samoa was among the first countries in the world to secure its border to protect its citizens from COVID-19. The authorities’ quick response to the measles outbreak in 2019 and the global pandemic has identified the policy priorities well,” says the I.M.F.
The international community also responded quickly, including the I.M.F. disbursement under the Rapid Credit Facility in April 2020 which helped unlock record budget support grants by the Asian Development Bank and the World Bank.
The authorities strengthened the health care system and provided support to the private sector, with efforts to target assistance to vulnerable businesses and households to safeguard livelihoods.
“Nevertheless, the prolonged effects of the global pandemic have heightened the economic challenges, and continued to adversely impact the wellbeing of Samoans,” the I.M.F. notes.
The compounding effects of the two consecutive health shocks pushed the 2020 September quarter real GDP to its 2014 level, with growth projected to contract by 7.8 percent in FY2021 (ending June 2021), and spawned setbacks on sustainable development goals, creating scarring effects.
“Resilient remittances and the government’s commitment to maintaining expansionary fiscal policies in the near term will likely turn the economy around for a gradual recovery starting in FY2022, with growth reaching 1.7 percent,” states the I.M.F.
The border closure and restrictions under the State of Emergency protected citizens from a domestic outbreak of the pandemic.
However, the economy experienced a deep contraction.
Bold and swift actions by the government, support from the international community, and resilient remittances helped moderate the impacts of the crisis, says the I.M.F.
Strong commitment by the government to stimulate the economy will help steer a gradual economic recovery.
“The recovery may face a bumpy road ahead with unprecedented uncertainty, and risks to the outlook remain tilted to the downside,” the I.M.F. says.
“The recovery critically depends on the execution of economic stimulus measures, procurement and rollout of vaccines, and resumption of private sector activities. Premature opening of the border poses a threat of a domestic outbreak of COVID-19.”