The ADB’s Pacific Economic Monitor, or PEM, for August 2009 said slow growth in Samoa was inevitable following the end of the “mini-boom” in construction and the “loss of jobs” at Yazaki’s large manufacturing operation.
The Asian company runs a large car parts manufacturing factory at Vaitele.
These redundancies unexpectedly pushed Samoa into recession, the PEM said. This is aggravated by a decline in remittances, weakening tourist numbers and the erosion of purchasing power by high inflation.
GDP in the September quarter of 2008 was 8 percent below the same period of the previous year, the December quarter was down 7.3 percent over the previous year, and the March quarter of 2009 was down 4.3 percent.
Tourist numbers are, however, showing greater improvement, and the restructure of Polynesian Airlines, development of major hotels and the filming of the Survivor reality television show in Samoa will boost growth in tourism this year.
But the bank said this won’t be big enough to cancel out the negatives brought about by the job losses at Yazaki and at the two canneries in neighboring American Samoa.
Commercial bank lending to the private has hardly changed since late 2008.
“2008/09 will record a large economic contraction. This is, however, expected to be the bottom of the downturn, primarily because of a large fiscal expansion provided for in the 2009/2010 budget,” the report stated.
“Some of the fiscal expansion is for projects that use few local products or services and offer little help to the economy, but others — notably expanded road works — have the potential to boost the economy.”
The ADB report also shows claims by Cook Islands that it’s the world’s first recession free nation only exists in its travel brochures.
“Latest data point to a continuation of weak economic conditions,” the report stated.
“Compared with the same quarter in 2008, in the March quarter of 2009 lending to business was down 2.8 percent; the volume of air cargo imports was down 41.8 percent; and car and truck registrations were both down more than 40 percent.
“The volume of air cargo exports (mainly fish) is now around 10 percent of 2005 levels.
“April and May data on key imports point to continuing weak demand.
“Underlying tax revenue collections were down about 3.5 percent in 2008/09 (they normally rise every year).”
