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• Mon. Apr 29th, 2024

Newsline Samoa

Samoa’s Economic Growth Led By Tourism And Remittances – Report

By sunlinesamoa

World Bank economists at the launching of the March Pacific Economic Update report on top of the Central Bank Building on Tuesday.

By Staff Writer

The World Bank 2024 Pacific Economic Update report shows Samoa is one of four Pacific Island countries dependent on Tourism and Remittances for its economic growth.

The others are Tonga, Vanuatu and Palau.

The update report outlines the economic growth in 11 island countries that recorded an “historically high growth rate of 9.1% in 2022” after the initial shock of the COVID-19 pandemic shock.

 The World Bank update report gives ‘twice a year assessment of  the economic status that also includes Fiji, Kiribati, Marshall Islands, Nauru, Solomon Islands and Tuvalu.

Findings from the current update shows that economic growth in the region slowed down to 5.5% in 2023 after the 9.1% burst the previous year in 2022.

The economic slow down reflected “slowing economic activity in Fiji, which accounts for more than half of the regions output.”

The report also found :

• Average inflation declined from a peak of 7.5% in 2022 to 6.5% in 2023, reflecting significant labour and supply shortages in tourism and remittances-led countries (Palau, Samoa, Tonga, and Vanuatu); nations that have grappled with pressures on the cost of goods and services.
• Pacific island countries are expected to see slower growth in 2024 and 2025, as the boost from the pandemic recovery fades and fiscal policies gradually tighten. Short-term risks have become more balanced since  the August 2023  Pacific Economic Update , with global commodity prices and inflation declining. However, shifts in global economic growth, trade, and international tourism pose significant challenges to economic prospects and poverty reduction, risks that could heighten due to geopolitical tensions.
• Despite the ongoing economic recovery, Pacific island countries still face formidable challenges. Medium-term growth prospects have worsened, with output significantly below the pre-pandemic trend. More than half of Pacific countries in the report are projected to see slower per capita growth than advanced economies, leading to widening income gaps and deteriorating prospects for poverty reduction.

Education holds the key to “long term development and improve medium-term growth prospects” in the region.

A special analysis in the updated report showed that “well-educated people are the most important asset for the Pacific.”

“Improvements in education can be made through stronger teacher training and more cost-effective investments in infrastructure and resources,” emphasised the report.

The Pacific Economic Updated report was officially launched at the World Bank Office on top of the Central Bank Building in Apia on Tuesday 6 March 2024.

Other member countries included in the report joined the launching vial online link.

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Low tourist arrivals? Let’s not panic, it’s only the second month

Not sure if people would have noticed the story on the inside pages of the recent Sunday Samoan edition, which had details on the number of travellers who’ve entered Samoa in the first month of the borders opening.

The article ( Over 9,000 arrive in first month of border opening ) in the 23 October 2022 edition of the Sunday Samoan was based on data courtesy of the Samoa Bureau of Statistics for the month of August 2022. 

Samoa’s borders opened on 1 August 2022 and the Government lifted all border restrictions with the bureau reporting that a total of 9,456 arrivals were recorded for that particular month. Out of the total number of arrivals in Samoa, 94.2 per cent travelled in by air while 5 per cent entered the country on a ship.

New Zealand was the leading country, in terms of visitor arrivals by country of usual residence, accounting for 41.6 per cent of total visitors or 2,644 visitors. Australia followed next with a distant 26.2 per cent (1,658) while American Samoa represented 11.4 per cent (719) while the U.S.A. represented 6.1 per cent (386) of total visitors to Samoa in August.

As to the reasons for the travellers' visits to Samoa, the majority of them (43.4 per cent) travelled to Samoa to visit friends and relatives, while 27.6 per cent entered Samoa's shores for holiday and vacation. Travellers who flew into Samoa in August for business or conferences accounted for 10.7 per cent while those in transit made up 1.4 per cent.

It is the last part of the data above, relating to their reasons for travelling to Samoa, which would be of great interest to our tourism operators. 

If you were to ask a tourism operator or an entrepreneur in the hospitality sector about the above figures, they would most likely say that they wish the 27.6 per cent of arrivals who flew in for “holiday and vacation” was much higher.

As this would translate to Samoa’s hotels, resorts, backpacker and beach fale accommodation generating much needed revenue to begin their journey to recovery post-Covid.

One tourism operator has had the opportunity to crunch the numbers: Samoa Samoa Tourism Association President and Vaimoana Resort Managing Director Tupa'i Saleimoa Vaai.

Speaking to the Samoa Observer on Tuesday after formalities that welcomed a tour of the big island by a delegation from NZ Māori Tourism, Tupa'i expressed concern at the impact of less tourist numbers on the national economy.

"I am a little concerned about the economy in Samoa. I think the statistics from the influx of flights would show that most of the people are Visiting Friends and Relatives," Tupa'i said. 

"The tourism industry needs real tourists and that is not a big part of the influx so far.

"Yes, it is good that there's busy rental car businesses, the restaurants are busy and people are building houses, it remains to be seen whether the much anticipated boost for tourism will eventuate any time soon.”

We don’t think Samoa’s tourism sector should be setting off the alarm bells just yet as the country is only into the second month since the borders opened. Actually, when the Government initially announced  the opening of the borders in May this year , we didn’t envisage international travellers including tourists clamouring over seats to catch the next available flight to Samoa due to a number of factors.

The high airfares and the absence of discount travel post-Covid remains an ongoing challenge for global tourism and Samoa is not immune to that global challenge. Throw in the Ukraine-Russia conflict, leading to the spike in fuel prices and adding to airline costs, and you get the picture that the outlook for our tourism sector isn’t good.

So how can Samoa’s financially plagued tourism sector get out of this quagmire? It wouldn't hurt changing our mindset to see the opportunities that come with the high number of “Visiting Friends and Relatives” arrivals.

Let’s not forget that every foreign visitor, including our friends and relatives who fly into Samoa, they come laden with foreign currency and would be looking to invest their hard-earned dollars in family reunions, weddings, birthdays or even matai bestowal ceremonies. 

Therein lies the opportunity, not only for the tourism and hospitality sectors, but a broad spectrum of the service industry who are likely to benefit from multiple cash injections for services rendered.

We are all in this together and while the economic outlook doesn’t look appealing over the short term, it is important we exercise patience and become innovative in the kind of products we can offer, not only to tourists but even countrymen and women who haven’t been home over the last 3 years.

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International tourism, number of arrivals in samoa was reported at 23900 in 2020, according to the world bank collection of development indicators, compiled from officially recognized sources. samoa - international tourism, number of arrivals - actual values, historical data, forecasts and projections were sourced from the world bank on april of 2024.,   gdp,   money,   government,   taxes,   climate.

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