Samoa's Gross Domestic Product (G.D.P.) fell by 8 per cent in the December quarter of 2020, making it the economy's fifth quarterly decline since last year. 

Two consecutive quarters of negative growth are typically used by economists as the benchmark for an economy in recession. 

The country's economy continues to decline due to the impact of the COVID-19 pandemic with borders closed to international tourists for the entirety of the quarter. (In correspondence obtained by the Samoa Observer last October it was revealed that the Governor of the Central Bank of Samoa, warned commercial banks of the possibility that the nation's economy might slide further into a depression). 

The latest G.D.P. drop is based on a year-on-year comparison with December 2019 and was revealed in a report titled: “Gross Domestic Product for the December 2020 quarter" issued by the Samoa Statistics Bureau last Thursday.

The report explained that total economic output fell by 8 per cent in the December 2020 quarter, lowering G.D.P. in real terms to $462.5 million. 

This follows revised growth rates of negative 15.4 per cent and 10.4 per cent in the September and June 2020 quarters respectively.

“The pandemic has directly affected most sectors of the economy with construction, travel and tour related activities, air, sea and land transport, accommodation and restaurant and financial services being the hardest hit,” the report says.

It also added that Samoa’s economy has now recorded five consecutive quarters of negative growth, reflecting the impact of the measles epidemic in December 2019 and the COVID-19 pandemic from March 2020.

Nevertheless the decline in the December 2020 quarter is now at moderate levels from the early months of the outbreak. 

Also, the December 2020 quarter results reflect an easing of activity following a post-lockdown catch up in the previous quarter, and the continued absence of international visitors.

“As a result, services industries which make up more than two thirds of the economy fell 7.8 per cent," the report stated.

“Goods-producing industries declined 13.6 per cent with construction being the major contributor to this decrease, while primary industries fell slightly by 0.1 per cent in the December 2020 quarter.

“Despite the relatively low levels of restriction on movement and business activity in the month of December compared to the March, June and September 2020 quarters, COVID-19 restrictions are still having an impact on economic activity.”

The report also says that a plateau of activities in Samoa's construction industry was the primary contributor to the decline in G.D.P. in the quarter under review as it has not recorded a single increase since December 2019. 

And while business services was the second biggest contributor to the overall decline, due to the impact of the pandemic on the tour operators and travel related businesses; real estate activities also declined during the same period.

Accommodation and restaurants were the third largest contributor to the decline, falling by 73 per cent following the closure of international borders. 

Financial services also recorded two consecutive quarters of negative growth as a result of the decline in the flow of money within the economy.

Meanwhile, fishing fell 13.8 per cent as the industry continues to be affected by poor weather conditions. 

Some industries did record positive growth for the period under review: food and beverage manufacturing, commerce, personal and other services, public administration, other manufacturing, agriculture, ownership of dwellings, electricity and water and communication. 

But the increase by these nine industries was not high enough to offset the economy's broader nosedive, the report found.