• Samoa:
• Economy

Samoa - Economy

Overview: In addition to remittances from Samoans living overseas, mainly in New Zealand, the economy relies heavily on subsistence agriculture, with cash crops, notably coconut, grown for export. It is therefore vulnerable to natural hazards, such as cyclones and crop diseases, and to fluctuations in world prices for commodities. GDP grew by 0.4% p.a. 1979–89.

There was serious cyclone damage in 1990, 1991 and 1998, when the coconut and banana crops were devastated. Compounding the problem was the taro leaf blight in 1993, which led to a further drop in agricultural output and exports. These setbacks resulted in fluctuating and often negative annual growth.

However, Samoa was early to embark on structural reforms and throughout the 1990s the government was controlling public-sector costs, encouraging diversification to reduce reliance on the agricultural sector and pursuing a programme of privatisation (22 state enterprises were privatised or closed down 1987–99). These policies led to enhanced growth from the latter 1990s. Fisheries were developed, new manufacturing enterprises emerged and an offshore financial sector launched. Tourist numbers increased steadily.

Overall, the economy staged a remarkable recovery, showing strong growth and low inflation from 1995 – interrupted only in 1997 by the Asian economic downturn – until the international downturn in 2002, when growth stalled and inflation rose to 8%. In 2003, despite the impact on tourism of the SARS outbreak, the growth rate rose to 3.5% with virtually no inflation.

Then in early 2004 the country suffered heavy cyclone damage, causing a pause to growth and rapid rise in inflation, but in 2005, with new investment in tourism, the economy was more buoyant, growth rising to 5% and inflation again under control at 2.4%.

Trade: Principal exports are fish, clothing, coconut oil, coconut cream, beer and copra. Main imports are vehicles, machinery, raw materials and consumer goods. Main trading partners are Australia (63%) and the USA for exports; and New Zealand, Fiji Islands, Australia, the USA and Japan for imports.

Fisheries: Since the mid-1990s there has been substantial growth in offshore fishing, using fish aggregating devices, and in fish farming. By 1998, the fishing industry had become the biggest export earner, accounting for 41% of the value of exports in 2005.