A. WORLD ECONOMY
– Recent IMF’s WEO published in January 2021 point to a 5.5% recovery in the global economy for 2021, from the 2020 COVID-19 adversely impacted -3.5% global contraction.
– This positive outlook is driven by high expectations of a strong rebound in economic activities as the vaccines becoming widely available however, risks remain elevated.
– The new COVID-19 variants present risks and uncertainty on the global recovery as restrictions/national lockdowns may be re-imposed.
Of Samoa’s main trading partners, the latest available economic releases point to:
• US economy growing by 4.1% in Q4 2020, slowing down from a record of 33.4% expansion in Q3 due to effects of COVID 19. For the full year 2020, real GDP contracted 3.5%, its worst economic performance since 1946. The inflation rate has remained at 1.4% in January 2021 while the unemployment rate dropped slightly.
• Australian economy recovered 3.3% in Q3 2020 following 2 consecutive quarterly contractions, boosted by a resumption in economic activities as COVID-19 restrictions were eased across the country.
• NZ economy rebounded strongly by 14% in the September 2020 quarter after its first recession in years with a 12.2% economic reduction in Q2. The inflation rate was unchanged at 1.4% in December 2020 while employment rate fell to 4.9% from 5.3% in the September quarter.
Global inflation continue to be subdued. While projections are for a possible pick up in inflationary pressures as economic activities recover, inflation rates are projected to generally moderate below most central bank’s targets of 1.5%. On the other hand, the inflation rates in developing economies are projected to drop due to reduced supply-side pressures.
Overall, most central banks are continuing with their easing monetary policies to support their respective economies.
B. DOMESTIC ECONOMIC DEVELOPMENTS
I. POLICY INSTRUMENTS AND DEVELOPMENTS
1. The government’s net financial position at end January 2021 recorded a huge surplus of $68.19 million (to $330.76 million).
2. On exchange rates, the average nominal value of the Tala in the first 7 months to January 2021 fell by 0.1% when compared to the same period last year.
3. The banking system’s average liquidity in the first 7 months to January 2021 increased by 9% (or $26.78 million) to $321.08 million compared to its average level in the same period last year.
4. The overall weighted average yield on CBS securities (or official interest rate) remained at 0.15%. Commercial banks’ weighted average deposit rate increased to 2.56% from 2.46% last year while the weighted average lending rate dropped to 8.54% from 8.88% in January 2020.
5. The annual rate of commercial bank credit grew by 2.5% lower than its growth rate of 5.6% at end January 2020.
6. Overall total money supply (M2) rose by $59.07 million in January 2021 to $1,290.073 million compared to the same month of last year.
II. MACRO-ECONOMIC OUTCOMES AND RESULTS – FIRST 7 MONTHS FY 2020/21 TO JANUARY 2021
7. Due to the closure of Samoan borders, there were no visitor arrivals and earnings in the 7 months to January 2021.
8. Private remittances increased by 9.5% to $362.88 million compared to the same period last year.
9. Total earning dropped by 32.1% to $55.61 million over the same period last year.
10. Import payments contracted by 14.1% to $475.37 million in first 7 months to January 2021. Merchandise trade deficit narrowed by 11% to $419.76 million in first 7 months of 2020/21 compared to the same period of last year.
11. Balance of payments posted a surplus of $137.87 million (to $754.05 million). The gross official reserves was sufficient to cover 11.7 months of imports.
12. The average volume of agricultural produce supplied to local markets around Apia area recorded a 14.6% drop. The overall price level decreased by 9.1% in the reviewed period.
13. The annual average headline inflation rate slowed to -2.4% at end January 2021 from 1.5% in January 2020.
14. The underlying inflation rate also dropped to -1.1% at end January 2021 compared to 1.2% in January 2020.
15. Real GDP – September 2020 quarter recorded a drop of 2.3% to $446.94 million from the previous quarter and also 16.3% lower compared to the same quarter last year.
16. For the whole year up to September 2020, real GDP growth fell by 8.6% compared to its high of 4.8% annual growth at end September 2019.
17. The annual nominal GDP per capita up to September 2020 decreased to $10,283; which was 9% lower than $11,305 in the 12 months up to September 2019.
18. Total outstanding external debt at end September 2020 stood at $1,027.7 million, or roughly 49.5% of nominal GDP.
19. Total debt servicing in the 12 months to September 2020 amounted to $65.71 million which was 12.4% lower than its level in the same period last year.
