Report highlights Covid impact on region
The outbreak of COVID-19 in the Pacific island countries and territories in 2020 led to many job losses, especially in the tourism and related industries, and triggered a slow down in overall economic activity.
This was highlighted in a report entitled “Changes in Consumer Prices in Selected Pacific Island Countries and Territories in 2020” which was released by the Pacific Community (S.P.C.).
The report reveals findings from more than 10 Pacific island countries and territories including Samoa.
According to the report, "many families saw a decline in their incomes necessitating recourse to a range of coping strategies.”
“The reports of the World Bank’s High Frequency Phone Monitoring Surveys of Households conducted in Papua New Guinea and Solomon Islands during the year throws further light on this,” reads the report.
The report also stated that with less to spend, consumer demand weakened.
“More and more people turned to, for example, growing food for their own consumption, sewing/mending their own clothes and forgoing personal activities such as going to the hairdresser, eating out, etc.
“Weakening demand led to a fall in the prices of various goods and services in many P.I.C.T. This sends a clear signal of a slowdown in the economies of P.I.C.T.
“The average change in prices of products consumed by households (a fixed basket of goods and services typically bought by households in a country) in 2020 compared to 2019 shows that of the twenty P.I.C.T., twelve had inflation whilst eight had deflation i.e., their inflation rates fell below zero.”
Out of the 12 Pacific countries and territories that had price increases in 2020: six countries (Cook Islands, Kiribati, Niue, Northern Mariana Islands, Solomon Islands and Vanuatu) paid more for goods and services they bought in 2020 than they paid in 2019.
Five countries (Guam, Nauru, Papua New Guinea, Tokelau and Tuvalu) had disinflation. Palau’s inflation rate stood still as compared to 2019.
And out of the eight Pacific countries and territories, American Samoa, Federated States of Micronesia, Fiji, New Caledonia, French Polynesia, Samoa, Tonga and Wallis & Futuna experienced deflation.
Fiji recorded the highest rate of deflation at 2.6 per cent followed by Samoa at 1.6 per cent. A peek at Fiji’s data from 1979 shows that this is the first time Fiji has experienced an annual rate of deflation.
With slowing economic activity and weakening demand the appearance of deflationary trends in post-COVID-19 in P.I.C.T. was to be expected. In 2021 unemployment will continue to be high and demand weak.