Find a Security Clearance Job!

Military


Samoa - Economy

Samoans operate on a predominantly informal economy, with only 18% of the population formally employed in a salaried position. The figures given reflect percentages of the formal economy, not necessarily the informal one, which represents more people but not much of the countrys wealth.

The Samoan economy is dependent on agricultural exports, tourism, and capital flows from abroad. The effects of three natural disasters in the early 1990s were overcome by the mid-1990s, but economic growth cooled again with the regional economic downturn and the September 29, 2009 Pacific tsunami, which devastated many of Samoas tourist resorts and connecting roads. Long-term development depends upon repairing and upgrading the tourist infrastructure, attracting foreign investment, and further diversification of the economy.

Samoas economy continues to perform well. Economic activity picked up during 2015/16 driven by tourism arrivals, lower fuel prices, and new fish processing facilities, further boosted by two major sporting events and infrastructure projects. Although the pace will moderate in 2017/18 and in 2018/19 with the closure of a large manufacturing plant, growth is expected to remain buoyant, with GDP growing at around 2 percent annually, driven by construction activity, infrastructure development and improvements in the business environment.

The outlook as of mid-2017 was moderately positive though subject to downside risks related to Samoas vulnerability to natural disasters, elevated contingent liabilities, and withdrawal of correspondent banking relationships. Given Samoas reliance on workers remittances, the closure of bank accounts of money transfer operators (MTOs) heightens the risk of a disruption to remittance payments.

In the early 1990s, Samoas economy suffered blows from two consecutive cyclones (Cyclone Ofa in 1990 and Cyclone Valerie in 1991) and an outbreak of taro leaf blight (a root crop which is the staple food and was the largest export). 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.

The primary sector (agriculture, forestry, and fishing) employs less than 2% of the labor force and produces 3.6% of GDP. Important products include coconuts and fish.

The service sector accounts for about three-quarters of GDP and employs approximately 50% of the labor force. Tourism is the largest single activity, more than doubling in visitor numbers and revenue over the last decade. In 2009, Samoas tourism industry encountered major obstacles, namely the global financial crisis and the devastation of the September 29 tsunami. The tsunami ravaged 25% of Upolu Islands south and southeastern coast, which housed some prime resorts and beach fales (villas). This, however, did not undermine the booming industry, with tourism arrivals increasing to more than 128,000 in 2009 and contributing over $120.8 million to the local economy. The tourism industry started rebuilding a week after the devastation, making use of subsidies and concessional loan assistance from the Samoan, New Zealand, and Australian Governments. Some hotels have since opened and others are in the process of rebuilding.

Industry accounts for about 13% of GDP while employing less than 6% of the work force. The largest industrial venture is Yazaki Samoa, a Japanese-owned company processing automotive components for export to Australia under a concessional market-access arrangement. The Yazaki plant employed more than 2,000 workers, making up over 20% of the manufacturing sector's total output. The pressures of the global financial crisis led to as many as 1,200 job cuts at the Yazaki plant by 2009; however, in 2010 conditions were more favorable and employment at the plant increased to 1,200.

New Zealand is Samoa's principal trading partner, typically providing between 35% and 40% of imports and purchasing 45%-50% of exports. The growing number of Asian-owned businesses in Samoa has led to increasing trade with Hong Kong and Japan. Australia, the United States, including American Samoa, and Fiji, are also important trading partners. Samoa's principal exports are coconut products, nonu fruit, and fish. Its main imports are food and beverages, industrial supplies, and fuels.

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 $6.7 million. There also has been a relative shift from Pacific markets to European ones, which now receive nearly 15% of Samoa's exports. These exports are still concentrated in fish ($5.8 million), nonu fruit products ($3.27 million), and coconut products ($0.9 million worth of copra, copra meal, coconut oil, and coconut cream), but are at least somewhat more diverse than before.

In March 2006, the United Nations reviewed Samoa's status as a Least Developed Country and recommended graduation into Developing Country status. Samoa sought a review of the decision on grounds of economic and environmental vulnerability, citing the 2009 tsunami and global financial crisis as grounds for extension. The UN agreed to extend Samoas transition period to 2014. In April 1998, Samoa applied for World Trade Organization membership. Samoa became the 155th member of the WTO in May 2012 and graduated from least developed country (LDC) status in January 2014.

Samoa annually receives important financial assistance from abroad. The more than 150,000 Samoans who live overseas provide two sources of revenue. Their direct remittances have amounted to $128.2 million per year recently (about 24% of GDP), and they account for more than half of all tourist visits. In addition to the expatriate community, Samoa also receives more than $28 million annually in official bilateral development assistance from 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.





NEWSLETTER
Join the GlobalSecurity.org mailing list