2018 Article IV Consultation-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Samoa

Abstract

2018 Article IV Consultation-Press Release; Staff Report; Staff Statement; and Statement by the Executive Director for Samoa

This statement contains information that has become available since the staff report was circulated to the Executive Board. This information does not alter the thrust of the staff appraisal.

Most recent data releases indicate a pickup in growth and inflation. Real GDP grew by 0.1 percent in the quarter ending December 2017, compared to the same quarter in 2016. This follows a growth rate of −2.6 percent in the quarter ending September 2017, compared to the same quarter in 2016. The pickup was driven by the commerce, construction, and communications sectors. The average annual CPI inflation rate for the year ending March 2018 was at 2.7 percent, compared to 2.3 percent in January 2018, partly reflecting an increase in prices of locally-produced food and beverages, the supply of which has been adversely affected by February’s Cyclone Gita.

International reserves continue to expand, standing at US$ 140 million as of February 2018. The current account deficit came in at US$ 19.5 million in 2017, while the capital account surplus reached US$43.2 million for 2017. As a result, international reserves rose further to 3.8 months of next year’s imports of goods and services in February 2018 (compared to 3.7 months of imports in January 2018). Capital inflows to Samoa in 2017 were mostly aid flows, which reached US$26 million (equivalent to 3.1 percent of GDP) in 2017. The Samoan tala remains near its end-December 2017 levels, at about 2.5 tala to the U.S. dollar, while there has been little change in nominal and real effective exchange rates thus far in 2018. Although export growth recovered to 7 percent (month-on-month) in December from −2 percent in November, a decline in import growth to −25.2 percent in December from 16.8 percent in November points to subdued domestic demand.