By Graeme Davies
Wales comes up against the unique challenge of Western Samoa this weekend in the second of the autumn rugby internationals.
And for its size, Samoa, as it is correctly known, has often punched above its weight at international level rugby. But what about the economy of this collection of small Pacific islands?
Samoa is an economic minnow, heavily reliant on agriculture and the tourist dollar for employment. It gained independence from New Zealand fifty years ago this year yet is still heavily reliant on New Zealand support, especially at times of crisis such as the tsunami which struck Samoa on 29 September 2009 killing 143 people and wrecking vast swathes of tourist developments around its coast.
Such natural disasters are an ongoing threat and highlight the country’s continued dependence on tourism as a major plank of its economic growth strategy. The country’s relative isolation and lack of significant natural resources and dependence on imported fuel supplies hamper the growth of its private sector.
Indeed, the breakdown of Samoa’s GDP shows tourism accounts for 20 per cent of GDP and remittances from Samoans working overseas outstrips even this at 24 per cent of GDP, after all there are as many Samoans living overseas than on the islands themselves. Elsewhere the statistics are rather stark, with only around 12 per cent of the population formally employed – two thirds are occupied by subsistence farming.
The main exports, apart from rugby players, are fish and agricultural produce along with some re-export of automotive parts for Japanese company Yazaki into the Australian market. Indeed Yazaki is Samoa’s biggest single employer, but it has been hit by the downturn in the global economy.
Reliance on tourism and overseas worker remittances leaves the Samoa vulnerable to shocks such as the global economic downturn. In 2008-09, the country suffered a 5.4 per cent fall in real GDP. A reliance on imports also makes Samoa vulnerable to inflation, on fuel in particular.
The government is keen to build more resilience and sustainability into its economy, yet is hampered by geography and its size – the total population is less than 200,000 people.
Following the tsunami, the government stepped in to support the rebuilding of tourist facilities thus boosting employment levels. And this is likely to be the main area in which foreign businesses could find opportunities to invest in Samoa, especially in high-end resorts, which would hope to attract big spending visitors to the islands.
Earlier this month the various island nations of the south pacific held a conference alongside the IMF-World Bank annual meeting in Tokyo. There was a collective call for the countries of the region to co-operate more closely economically, particularly in trying to exploit their relative proximity to fast-growth Asian economies.
The meeting was reminded that Asia is expected to grow at 6 per cent in 2013 and emerging Asia at 7 per cent, outlining the potential for islands such as Samoa to be pulled along. At the same time, Samoa can do more in terms of self help by improving its own sustainability, looking at renewable energy to lessen its reliance on imported commodities. These could also represent areas in which overseas companies could look to build their presence in Samoa.