The nation’s economic decline is picking up speed as the pandemic drags on with new figures showing a drop in output of 12 per cent in recent months. 

On Friday, the Central Bank of Samoa (C.B.S.) released an update of the economy for the first quarter of the current Financial Year showing the extent of the recent decline. 

It found that the nation’s total economic output for the first quarter of the current Financial Year was some 11.9 per cent lower when compared to the same period the year prior. 

(On an annualised basis, taking into account the previous three quarters, the drop is 3.1 per cent). 

The quarterly fall saw the nation’s total Gross Domestic Product fall in value from $556.33 million for the June quarter in 2019 to just $489.89 million. 

The Bank’s new analysis showed that the contraction in Gross Domestic Product over the 2019-20 Financial Year was greater than had been forecast by 0.2 per cent. The bank had expected overall output to fall by 3.3 per cent but it dropped by 3.5 per cent. 

The revised data showed Samoa’s economy performed by a total of 7.1 per cent worse in the previous financial year on the basis of an annual comparison. 

Despite the data showing that the economy’s decline is continuing in the first two months of the current financial period remittances have in fact risen by 8.8 per cent compared to the same period last year.

At present, the country’s real (or inflation adjusted) G.D.P. is $1,975.5 million, compared to $2,046.9 million in 2018-2019.

The large drop is driven mostly by a plunge in the value of tourism from $539.53 million in 2018-2019 to $375.3 million in 2019-2020, the new data showed.

Meanwhile, the current period has shown zero dollars in total receipts from visitor arrivals. This compared to $120.44 million in the two months to August last year.

Total exports for the first quarter stood at $21.76 million, 18.7 per cent lower than 2019 when they had reached $26.77 million.

The net trade of goods deficit for the first quarter of this year reached $109.36 million, a year-on-year drop of 17.1 per cent.

According to C.B.S. data, the Government imports plummeted by 46.0 per cent to $6.92 million. Petroleum decreased by 46.7 per cent to $21.86 million due to reduced fuel demand, while the non-petroleum private sector edged down by 2.3 per cent to $102.34 million.

Agricultural products supplied to local markets fell by 20.3 per cent for the first quarter of this year on the basis of an annual comparison. 

Inflation, the rise in the general level of prices, continues to fall further to 0.8 per cent in August 2020, from 1.4 per cent in August of 2019. And due to weak demand, the average prices of agricultural produce sold at the local markets also fell by 1.6 per cent.

By the end of August 2020, commercial banks were listed as “well capitalised” by the country’s central bank and in a safer position compared to the year prior. 

The capital adequacy ratio - which measures the amount of capital a bank has compared to its risk exposure - is significantly higher at 29.7 per cent compared to 27.5 per cent at end June 2019.

The C.B.S. report stated that the country’s official total foreign reserves stood at $693.62 million in August. This is 37.3 per cent or $188.39 million increase compared to the year before and is an amount sufficient to cover 10.1 months of imports, the bank said. 

“On the exchange rate front, the major foreign currencies have traded back to their pre-March 2020 levels, with the [U.S. Dollar] weakening since June 2020,” the C.B.S. report reads.

“Some market expectations are for the major currencies (such as those in Samoa’s Currency Basket Currency) to continue to moderate around current levels, as Covid-19 factors, domestic and global economic developments, and other global downside risks will continue to influence the foreign exchange markets.”

The report also noted that the global outlook for the next twelve months remains plagued by uncertainty, with most of the economic costs related to COVID-19 containment measures expected to hit mainly this year.