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- GDP (PPP):
- $1.0 billion
- 1.7% growth
- 1.4% 5-year compound annual growth
- $5,174 per capita
- Inflation (CPI):
- FDI Inflow:
The government of Samoa has lagged in reforming vital economic institutions. More vibrant economic growth is constrained by lingering structural weaknesses that continue to undermine economic freedom. Particularly because of persistent corruption, the rule of law is not firmly institutionalized through a well-functioning judicial system. Inefficient and high public spending has resulted in a considerable fiscal burden for the population.
Modest regulatory reforms, including simplification of the business start-up process, have led to increased efficiency. However, the pace of reform has slowed in recent years, and policies to open markets further have not been advanced. The Samoan economy has become more dependent on remittances and foreign aid.
Samoa is a small South Pacific archipelago with a population of less than 200,000. Independent since 1962, it is now a multi-party, unicameral parliamentary 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. Current Prime Minister Tuilaepa Aiono Sailele Malielegaoi, in office since 1998, was reelected in March 2016. Two-thirds of the workforce is employed in the fishing and agricultural sector, which produces 90 percent of exports. Samoa’s economy is based on fishing, agriculture, and tourism.
The judiciary is independent, but a modern and well-functioning legal framework for land ownership and enforcement of property rights is not firmly in place. Official corruption is a major cause of public discontent. An associate minister was found guilty of forgery in January 2016 and later resigned from Parliament, but the recently reelected government has refused to set up an anticorruption tribunal.
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 22.4 percent of total domestic income. Government spending has amounted to 40 percent of total output (GDP) over the past three years, and budget deficits have averaged 4.1 percent of GDP. Public debt is equivalent to 55.5 percent of GDP.
The application of commercial codes is not always straightforward, and bureaucratic uncertainty continues to hamper the emergence of a vibrant private sector. The nonsalary cost of employing a worker is not costly, but the formal labor market is not fully developed. The government’s response to IMF advice that it should privatize the highly subsidized electricity-generation company and other state-owned enterprises has been lackluster.
Trade is important to Samoa’s economy; the value of exports and imports taken together equals 78 percent of GDP. The average applied tariff rate is 9.7 percent. Foreign investors may not own land, and investment in some sectors of the economy is restricted. Samoa’s small and underdeveloped financial sector is dominated by banking. A significant portion of the population remains unconnected to the formal banking system.