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- GDP (PPP):
- $1.0 billion
- 1.9% growth
- 1.2% 5-year compound annual growth
- $5,180 per capita
- Inflation (CPI):
- FDI Inflow:
Samoa’s recent structural reform agenda has focused on enhancing agriculture and tourism and lowering the cost of conducting business, particularly the very high cost of electricity. However, the lack of commitment to opening markets continues to hinder diversification of the economy, which has become more dependent on foreign aid and remittances. Progress in reforming state-owned enterprises has stalled.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 63.5 (up 1.6 points)
- Economic Freedom Status: Moderately Free
- Global Ranking: 69th
- Regional Ranking: 13th in the Asia–Pacific Region
- Notable Successes: Monetary Freedom
- Concerns: Corruption, Financial Freedom, and Investment Freedom
- Overall Score Change Since 2012: +3
Institutional impediments to the creation of a dynamic private sector prevent viable long-term economic development of the island economy. Despite some progress, poor public services and the absence of an efficient judiciary continue to undercut trust and confidence in the government.
Samoa is a small South Pacific archipelago with a population of less than 200,000. Independent since 1962, it is now a multi-party democracy dominated politically by the Human Rights Protection Party (HRPP). A few politicians were found guilty of bribery during the 2011 parliamentary elections, but the HRPP remains in power. Samoa is preparing for general elections in 2016. The economy is based on fishing, agriculture, and tourism. Remittances from Samoans working abroad account for about 20 percent of national income. A sizable tsunami in 2009 killed over 200 people and significantly damaged infrastructure and property. To facilitate better trade with Australia and New Zealand, Samoa officially moved west of the International Date Line in 2011.
Although several high-profile cases of official corruption and abuse have been a source of public discontent in recent years, in January 2015, the prime minister rejected a call by the opposition party for the government to set up an Anti-Corruption Tribunal. The judiciary is independent, but a modern and well-functioning legal framework for land ownership and enforcement of property rights is not in place.
The top individual income and corporate tax rates are 27 percent. Other taxes include a value-added tax and excise taxes. The overall tax burden equals 25.6 percent of total domestic income. Government spending now equals about 37.6 percent of GDP. The budget deficit has been declining to around 5 percent of GDP, but public debt continues to equal over 50 percent of total domestic output.
The regulatory framework generally supports entrepreneurial activity, but application of the commercial codes is not always straightforward. A well-functioning modern labor market is not fully developed, and informal labor activity remains substantial. The 2015 IMF report on Samoa urged the government to proceed with privatization of the inefficient and highly subsidized electricity-generation company and other state-owned enterprises.
Samoa’s average tariff rate was 9.7 percent as of 2013. Investors may lease but not own land. Foreign investment is restricted in bus and taxi transportation, some retail services, and commercial fishing. Non-transparent regulations continue to deter dynamic growth in long-term capital flows. Scarce access to financial services continues to keep much of the population outside of the formal banking sector.