At its Meeting on the 3rd of March 2023, the Central Bank Board approved
the continuation of its loosening monetary policy stance for the rest of the financial year 2022/2023.
The Board considered the expected slowdown in the world economy in 2023 given the adverse impact
of the Russia-Ukraine war and the tightening monetary policies undertaken by large and advanced
economies, as well as the expected recovery of the Samoan economy in FY2022/23 after 3 consecutive
years of negative economic growth.
According to the January 2023 World Economic Outlook by the International Monetary Fund (IMF), the
global economy is expected to expand by 2.9 percent in 2023, down from 3.4 percent in 2022. This
weakening in global economic activities partially reflects the reduction and removal of earlier fiscal and
monetary stimulus as most major central banks’ attempt to tighten economic activities to slowdown the
current strong inflationary pressures worldwide.
For Samoa, the latest National Accounts figures showed that the economy recorded a 4.7 percent
rebound in September 2022 quarter in line with the reopening of international borders. Latest monthly
economic indicators such as remittances, exports and visitor earnings point to a similar or even higher
growth for the December 2022 quarter. Coupled with the expansionary fiscal policy approved by
Parliament for FY2022/23 and the strong pickup in business activity so far, real GDP is expected to
expand by around 3.0 percent for the whole year 2022/2023.
On the other hand, inflation has risen steadily in the past 15 months and has peaked at 11.3 percent in
November 2022 and has started to come down to 11.0 percent in December 2022. Imported (prices)
inflation has started to ease so far given the aggressive monetary tightening by advanced economies
around the world, however domestic inflation is rising steadily and yet to peak. All in all, inflation is
expected to drop to around 10.0 percent by June 2023 and continue to slow down for the remainder of
2023.
On the external sector, proceeds from the export of goods, remittances and visitor earnings all recorded
strong improvements in the first six months to December 2022. In addition, imports of goods have also
expanded significantly in the first half of the year. The outlook for FY2022/23 points to a 41.4 percent
rebound in exports of goods driven by strong recovery in fish and coconut oil exports. Visitor earnings
continue to exceed its original forecast given the strong demand from overseas families and friends to
visit Samoa while remittances are again expected to expand by another 6.4 percent during the year.
Mitigating these large inflows is the expected rise in import payments to around 19.2 percent in FY 2022/2023. All in all, total foreign reserves are expected to improve by around $35.0 million to a total of
$842.90 million by June 2023 or around 9.4 months of imports in FY 2022/23.
Despite the expected level of inflation staying above the 3.0 percent inflation target, the CBS Board felt
that monetary policy should remain eased to support and ensure economic recovery is fully realized and
entrenched, after a long period of depression. Furthermore, inflation is starting to recede gradually from
January 2023 onwards and would be at around 10.0 percent by June 2023. The strong and comfortable
level of our international reserves also supports this easing of the monetary policy stance.