American Samoa

Tropical Storm Gita has some significant effects on American Samoa's GDP and economic forecast

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By Fili Sagapolutele

Pago Pago, AMERICAN SAMOA — American Samoa’s real gross domestic product (GDP) is forecasted to decrease this year through 2022, according to the 2019 American Samoa Economic Forecast (ASEF) report which also revealed that by some estimates, Tropical Storm Gita early last year “caused as much as $186 million in direct and indirect damages across the territory.”

The report, published by the Commerce Department’s Statistics Division, featured a baseline forecast and two alternative forecasts of American Samoa’s economy for 2018-2022. It also “offers an unprecedented look into economic trends in the territory, which is particularly useful to businesses, policy-makers, and other individuals that may rely on local economic data,” said DOC director Keniseli Lafaele in releasing the report.

“Projections in the 2019 American Samoa Economic Forecast are not predictions of future events, but rather modeled estimates of what may occur, based on historic observations and certain assumptions,” notes the 56-page report, which also provides economic forecast analysis for the Pacific Region (including Samoa, Tonga and Fiji) and the US.

For American Samoa, the executive summary states that the territory experienced modest economic expansion in 2014 and 2015, which was spurred, in part, by a large capital investment by Tri Marine International for the purchase and construction of Samoa Tuna Processors cannery, which opened in early in 2016, but regional competition forced the company to permanently halt operations by the end of that same year.

Nominal GDP in American Samoa fell by 0.2% in 2016, it says, adding that Tri Marine's closure contributed to a spike in the territory’s unemployment rate in 2017, from 10.5% to 14.3%

The report says both private and public sector consumption languished that year, and the economy contracted by an estimated 3.7%

The territory is expected to have experienced modest deflation in the same year. As a result, Real Gross Domestic Product (Real GDP) is projected to have contracted by a more subdued rate of 1.9%t in 2017.

“This contraction may have extended into 2018, if not for a devastating February 2018 Tropical Storm Gita that impacted much of American Samoa,” it says. “By some estimate... Gita caused as much as $186 million in direct and indirect damages across the territory.”

US government disaster agencies and international relief organizations poured millions of dollars into the local economy and helped to lift employment, income, and spending throughout the first half of the year. Additionally, American Samoa benefited from recent strength in the broader US economy in 2018, driven primarily by strength in labor markets.

According to the report, ongoing disaster relief funding from Gita is expected to contribute to modest consumer and government spending increases in American Samoa in 2018. The GDP growth in the territory was calculated at 3.9% in 2018, or 0.7% when adjusted for inflation.

“Once the immediate fiscal effects of the tropical storm have diminished, so will much of the economic stimulus,” says the report, which also notes that the real GDP is forecast to decrease by 3.5% in 2019; 1.0% in 2020; 2.3% in 2021, an 2.0% in 2022.

“This anticipated multi-year contraction is partially driven by higher inflation and is best viewed as a return to a more sustainable long-term trend, following multiple years of energy price decreases and stronger-than-usual capital investments,” according to the report.