Samoa economic update 2007

Abstract

There is general optimism about the short-term economic and financial prospects of the Samoan economy. Economic growth is expected to be sustained at around 3 per cent per annum over the next three years, driven mainly by continuing rapid growth in the tourism, commerce, and financial services sectors. On the inflation front, it is estimated that increases in prices will average around 3 per cent per annum during 2007/08. Budget expenditure pressures arising from the need to construct infrastructure for the South Pacific Games in 2007 will now ease, thus helping to keep the budget deficit on target at less than one per cent of GDP. Although the balance of payments structure is fragile, it is forecast that there will be surpluses in the next three years from expected strong earnings from tourism and remittances. Agriculture however is declining, leading to the pressure of lost employment opportunities in rural areas. Significant reforms in telecommunications and a new focus on tourism, together with continuing commitment to earlier public sector reforms offer positive lessons to other small and vulnerable economies.