Samoa's economy will shrink another 9.2 per cent this fiscal year, with economic recovery possible only in 2022, when Samoa may be able to again compete for international tourists, new figures show. 

The gloomy outlook is contained within a report released earlier this week by the Asian Development Bank (A.D.B.): "Asian Development Outlook 2021: Financing a Green and Inclusive Recovery".

The 2019 measles epidemic followed very shortly by the closure of the nation's border after the global COVID-19 caused national Gross Domestic Product (G.D.P.). to contract by 3.2 per cent last fiscal year, the bank found. 

That was despite Government stimulus measures equal to 3.1 per cent that fiscal year, which grew to 4.2 per cent of G.D.P. this year, the report found.

As visitor arrivals plummeted other parts of the nation's economy declined even further, including commerce, which fell by 4.4 per cent and manufacturing which dropped by 12.8 percent. 

Remittances were one of the few sectors of the economy to hold strong; they grew by 4.9 per cent. 

Economic recovery is forecast to be reached only by 2022, after full vaccine coverage is estimated to have been achieved and international travelers return in significant numbers. 

By then Samoa's economy, which depends on more than 20 per cent on the tourist dollar will have been without incoming travelers' dollars for two years. 

But the bank predicts the bounceback will be modest relative to this year's fall with only growth of 3.1 per cent projected for 2022 as competition for the international tourism market becomes particularly intense.

And by then, if that does indeed prove the point at which international travel resumes, the bank found that many tourism businesses and workers have moved on during the pandemic-led crash.

"Evidence shows skilled workers moving out of tourism or even abroad," the report stated. 

"An estimated 3,500 of 6,000 tourism workers in Samoa have found other employment."

The report also states that after moderating to 1.5 per cent in the 2020 fiscal year, consumer inflation turned negative in the second half of 2020.

“Deflation is expected to reach 2.5 [per cent] in FY2021 as agricultural production rises and prices fall for imports and for domestic utilities subsidized through government stimulus. Recovery in local demand and import prices is expected to revive inflation to 2.7 [per cent] in FY2022,” the report states.

“Samoa recorded a fiscal surplus equal to 6.2 [per cent] of G.D.P. in FY2020 as international grant assistance complemented domestic tax receipts that exceeded expectations, and as underspending of the capital budget saw capital expenditure plunge by 47.2%.

“The resulting avoidance of debt financing reduced government debt outstanding to the equivalent of 46.3 [per cent] of G.D.P. by the end of FY2020. A fiscal deficit equal to 3.1% of G.D.P. is projected in FY2021 due to continued stimulus measures and weakness in tax receipts offsetting a rapid increase in grant financing from development partners.”

According to the report, the national current account surplus narrowed to 1.2 [per cent] of G.D.P. in the 2020 fiscal year as the 20.4 per cent fall in tourism receipts and other service exports dwarfed a 6.7 per cent decline in goods imports.

“Despite robust remittances in FY2021, the current account is forecast to fall into a deficit equal to 6.4 [per cent] of G.D.P. because of increased imports to supply construction and a complete absence of tourism receipts. Remittances are expected to moderate from recent highs in FY2022, with the current account deficit projected widening to 10.4% of G.D.P.,” the report states.

In the "Samoa 2040 Plan" launched this year the Ministry of Finance (M.O.F.) released its vision for the nation's future economic development and tourism is listed as one of the four pillars for driving that growth in the coming decades.

The plan predicts that tourism will be the largest driver of the nation's economic growth by 2040, accounting for roughly $500 million of the plan's goal to boost the nation's total economic output by $1.25 billion by 2040.

The plan proposes to increase the number of international visitors to Samoa to 400,000 by 2040, up from initial projections of 300,000, increasing the sector's worth in excess of $500 million.

But some critics from the tourism industry criticised the plan for being overly optimistic about the industry's ability to hang on until the international market for tourism revived given it was already on its knees.