Tourism drives surge in economy
The Samoan economy returned to a rate of substantial economic growth of 5.7 per cent last financial year, as growth in tourism, money sent from overseas and exports, boosted a previously flagging economy, according to the Central Bank.
Samoa’s Gross Domestic Product (G.D.P.) grew to reach $2.225 billion tala in the year to June this year, figures released by the Bank on Thursday show. That equates to growth of 5.7 per cent or about $120 million – the economy's biggest proportional rise since 2015-16.
“This growth was led by tourism,” said Dr. Robert Kirkby, a Macroeconomist at Victoria University of Wellington.
“Also substantial were increases in remittances, up [for the third quarter of 2019] 9 per cent, and increased exports of goods, up 8.2 per cent [over the same quarter].”
The update, released by the Bank on Thursday, combined a single end-of-financial year G.D.P. growth update with a report on the economy's third quarter performance for the quarter to September; figures which may give some insight into the drivers of the preceding growth.
According to the Bank, Samoa’s G.D.P. expanded by only 0.2 per cent in the 2018/19 Financial Year and 1 per cent the year prior before a significant 9.3 per cent growth rate recorded the year prior.
“These figures show Samoa returning to substantial economic growth, but with underlying concerns about a potential over-dependence on tourism and remittances,” Dr. Kirkby said.
For the quarter concerned, G.D.P. growth increased by 8 per cent this year.
For the third quarter visitor arrivals were up by 15.2 per cent, according to the bank. But they spent even more over the same period, with earnings increasing more than 18.4 per cent.
The bank reported that Samoa’s official inflation rate had fallen for the 11th straight month to reach 1.0 per cent for the month of September.
But it has not been entirely good news for consumers.
The average agricultural produce sold at the local markets from June to September rose by an average of just over 8 per cent.
This was attributed to decreased supplies of ta'amū while the bulk of the decline was recorded for vegetables (particularly head cabbage, tomatoes, cucumber and pumpkin).
The decrease in supply led to an average price rise of some 24.1 per cent, driven mostly by vegetables, the Bank said.
Remittances (or money sent back home by friends or relatives) grew by 8 per cent for the third quarter or growth that amounted to $10 million tala.
On a quarterly basis, exports grew 8 per cent to $39.04 million in the three months to September 2019 compared to last year. The bank said domestically produced exports, mainly fish and taro, while “re-exports” reached growth of only 10 per cent.
The Bank noted that the relatively good news for Samoa came amidst the backdrop of gloomy global economic conditions, including Samoa’s major trading partners.
Annual growth forecasts in America have been forecast to contract to 2 per cent, following the impact of its trade war with China.
Quarterly economic growth in Australia and New Zealand both fell to 1.4 per cent and 2.1 per cent, after recent disappointing consumer data in the former.
That weak outlook meant that Australia, America and New Zealand were all expected to cut interest rates in the near future, the Bank said.
“A large increase in Government import of goods was offset by a fall in the value of petrol imports, thanks largely to a fall in global petrol prices,” Dr. Kirkby said.
Total outstanding external debt at end June 2019 stood at $1,043.6 million, or roughly 46.9 percent of nominal GDP.
This was 4.6 percent lower than its level ($1,094.3 million) at end June 2018, the Bank said.