Economy of Samoa
The economy of Samoa is dependent on agricultural exports, development aid and private financing from overseas. The country is vulnerable to devastating storms. Agriculture employs two-thirds of the labor force, and furnishes 9% of exports, featuring coconut cream, coconut oil and copra. Outside a large automotive wire harness factory, the manufacturing sector mainly processes agricultural products. Tourism is an expanding sector; more than 70,000 tourists visited the islands in 1996 and 120,000 in 2014.[3] The Samoan Government has called for deregulation of the financial sector, encouragement of investment, and continued fiscal discipline. Observers point to the flexibility of the labor market as a basic strength factor for future economic advances.
| Statistics | |
|---|---|
| GDP | |
GDP growth |
|
GDP per capita | |
| 3.672% (2018)[1] | |
| 89th (2017)[2] | |
Trade
New Zealand is Samoa's principal trading partner, typically providing between 35% and 40% of imports and purchasing 45%–50% of exports. Australia, American Samoa, the United States, and Fiji are also important trading partners. Its main imports are food and beverages, industrial supplies, and fuels. The primary sector (agriculture, forestry, and fishing) employs nearly two-thirds of the labor force and produces 17% of GDP. Samoa's principal exports are coconut products and fish.
Fishing has had some success in Samoan waters, but the biggest fisheries industry (headed by Van Camp and StarKist) has been based in American Samoa. StarKist Management announced that it was going ahead with setting up at Asau a blast-freezer project to be operational by 2002. This announcement dispelled a growing suspicion about the genuine motives of StarKist to move to Samoa. The proposed blast-freezer operations in Asau were expected to bring this village back to life.
Non-conventional sources of revenue
Samoa annually receives important financial assistance from abroad. More than 100,000 Samoans who live overseas provide two sources of revenue. Their direct remittances have amounted to $12.1 million per year recently, and they account for more than half of all tourist visits. In addition to the expatriate community, Samoa also receives roughly $28 million annually in official development assistance from sources led by China, Japan, Australia, and New Zealand. These three sources of revenue—tourism, private transfers, and official transfers—allow Samoa to cover its persistently large trade deficit.
In the late 1960s, Potlatch Forests, Inc. (a US company), upgraded the harbour and airport at Asau on the northern coast of Savai'i and established a timber operation, Samoa Forest Products, for harvesting tropical hardwoods. Potlatch invested about US$2,500,000 in a state-of-the-art sawmill and another US$6,000,000 over several years to develop power, water, and haul roads for their facility. Asau, with the Potlatch sawmillers and Samoa Forest Products, was one of the busiest parts of Savai'i in the 1960s and 1970s; however, the departure of Potlatch and the scaling down of the sawmill has left Asau a ghost town in recent years.
Manufacturing
Until 2017 industry accounted for over one-quarter of GDP while employing less than 6% of the work force. The largest industrial venture was Yazaki Samoa, a Japanese-owned company processing automotive wire harnesses for export to Australia under a concessional market-access arrangement. The Yazaki plant employed more than 2,000 workers and made up over 20% of the manufacturing sector's total output. Net receipts amounted to between $1.5 million and $3.03 million annually, although shipments from Yazaki was counted as services (export processing) and therefore did not officially appear as merchandise exports. Yazaki Samoa closed down in 2017,[4] but in the same year Fero, a New Zealand manufacturer producing wiring units, set up in Samoa in the same plant used by Yazaki.[5]
Natural disasters
The effects of three natural disasters in the early 1990s were overcome by the middle of the decade, but economic growth cooled again with the regional economic downturn. Long-run development depends upon upgrading the tourist infrastructure, attracting foreign investment, and further diversification of the economy.
Two major cyclones hit Samoa at the beginning of the 1990s. Cyclone Ofa left an estimated 10,000 islanders homeless in February 1990; Cyclone Val caused 13 deaths and hundreds of millions of dollars in damage in December 1991. As a result, gross domestic product declined by nearly 50% from 1989 to 1991. These experiences and Samoa's position as a low-lying island state punctuate its concern about global climate change.
Further economic problems occurred in 1994 with an outbreak of taro leaf blight and the near collapse of the national airline Polynesian Airlines. Taro, a root crop, traditionally was Samoa's largest export, generating more than half of all export revenue in 1993. But a fungal blight decimated the plants, and in each year since 1994 taro exports have accounted for less than 1% of export revenue. Polynesian Airlines reached a financial crisis in 1994, which disrupted the tourist industry and eventually required a government bailout.
The government responded to these shocks with a major program of road building and post-cyclone infrastructure repair. Economic reforms were stepped up, including the liberalization of exchange controls. GDP growth rebounded to over 6% in both 1995 and 1996 before slowing again at the end of the decade.
Future prospects
The collapse of taro exports in 1994 has had the unintended effect of modestly diversifying Samoa's export products and markets. Prior to the taro leaf blight, Samoa's exports consisted of taro ($1.1 million), coconut cream ($540,000), and "other" ($350,000). Ninety percent of exports went to the Pacific region, and only 1% went to Europe. Forced to look for alternatives to taro, Samoa's exporters have dramatically increased the production of copra, coconut oil, and fish. These three products, which combined to produce export revenue of less than $100,000 in 1993, now account for over $3.8 million. There also has been a relative shift from Pacific markets to European ones, which now receive nearly 15% of Samoa's exports. Samoa's exports are still concentrated in coconut products ($2.36 million worth of copra, copra meal, coconut oil, and coconut cream) and fish ($1.51 million) but are at least somewhat more diverse than before.
Tourism
In 1972, more than 85,000 visitors arrived in Samoa, contributing over $12 million to the local economy. One-third came from American Samoa, 28% from New Zealand, and 11% from the United States. Arrivals also increased in 2000, as visitors to the South Pacific avoided the political strife in Fiji by traveling to Samoa instead.
Tourism numbers and revenue have more than doubled in the last decade. Samoa received 122,000 visitors in 2007 and increased to a total of 145,176 visitors in 2016. About 46% came from New Zealand, 20% from Australia and 7% from the United States. Samoans living overseas accounted for about 33% of all tourist numbers (South Pacific Tourism Organisation (SPTO), 2017). The service sector accounts for more than half of GDP and employs approximately 30% of the labor force.
Statistics
GDP:
purchasing power parity – US$1.137 billion (2017 est.)[6]
GDP – real growth rate: 2.5% (2017 est.)[6]
GDP – per capita: purchasing power parity – $5,700 (2017 est.)[6]
GDP – composition by sector:
(2017 est.)[6]
agriculture:
10.4%
industry:
23.6%
services:
66%
Population below poverty line: NA%
Household income or consumption by percentage share:
lowest 10%:
NA%
highest 10%:
NA%
Inflation rate (consumer prices): 1.3% (2017 est.)[6]
Labor force: 50,700 (2016 est.)[6]
Labor force – by occupation::
(2015 est.)[6]
agriculture:
65%
industry:
6%
services:
29%
Unemployment rate: 5.2% (2017 est.)[6]
Ease of Doing Business Rank: 57th[7]
Budget:
revenues:
$110 million
expenditures:
$122 million (2011–12)
Industries: tourism, food processing, auto parts, building materials
Industrial production growth rate: 5,3% (2010 est.)
Electricity – production: 200 GWh (2010)
Electricity – production by source:
fossil fuel:
60%
hydro:
40%
nuclear:
0%
other:
0% (2008)
Electricity – consumption: 150 GWh (2008)
Electricity – exports: 1 kWh (2008)
Electricity – imports: 0 kWh (2008)
Agriculture – products: coconuts, bananas, taro, yams, coffee, cocoa
Exports: $152 million (f.o.b., 2012)
Exports – commodities: coconut oil and cream, copra, fish, beer
Exports – partners: American Samoa, Australia, New Zealand, United States, Germany
Imports: $258 million (f.o.b., 2012)
Imports – commodities: machinery and equipment, foodstuffs
Imports – partners: Australia, New Zealand, Japan, Fiji, United States
Debt – external: $145 million (2010 est.)
Economic aid – recipient: $24.3 million (2010)
Currency: 1 tala (WS$) = 100 sene
Exchange rates: tala (WS$) per US$1 – 3.0460 (January 2000), 3.0120 (1999), 2.9429 (1998), 2.5562 (1997), 2.4618 (1996), 2.4722 (1995)
Fiscal year: calendar year
Notes
- "World Economic Outlook Database, October 2019". IMF.org. International Monetary Fund. Retrieved 21 October 2019.
- "Ease of Doing Business in Samoa". Doingbusiness.org. Retrieved 25 January 2017.
- http://www.indexmundi.com/facts/samoa/international-tourism
- http://www.samoaobserver.ws/en/26_08_2017/local/23599/Samoa-bids-farewell-to-Yazaki.htm
- https://fero.co.nz/fero-samoa/
- "The World Factbook: Samoa. (2018, February 01)". Central Intelligence Agency.Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ws.html
- "Doing Business in Samoa 2013". World Bank. Retrieved 23 October 2012.