Samoa’s strong post-pandemic recovery has slowed sharply, with the International Monetary Fund (IMF) warning that weaker domestic demand, rising global energy prices and persistent structural challenges are weighing on the economy and clouding the near-term outlook.
The IMF, in its 2026 Article IV Consultation concluding statement, estimated Samoa’s economy grew by just 0.4 percent in FY2025/26, down from 4.2 percent the previous fiscal year, reflecting weak household consumption, subdued private investment, lower agricultural output and the fading impact of the 2024 Commonwealth Heads of Government Meeting (CHOGM).
The Fund expects growth to recover gradually to 2 percent in FY2026/27, supported by an expansionary fiscal stance, although elevated oil prices are expected to continue weighing on household incomes, tourism demand and project implementation. Inflation is projected to rise to 4.5 percent, while the current account is forecast to return to a deficit as higher fuel import costs take effect.
The IMF said policy priorities should focus on preserving macroeconomic stability while supporting vulnerable households and strengthening resilience.
“Policy priorities should therefore focus on preserving macroeconomic stability through a prudent but supportive fiscal stance, remaining vigilant against inflationary pressures, safeguarding financial sector resilience, and advancing structural reforms to strengthen medium-term growth.”
The Fund said Samoa entered the slowdown from a position of strength, supported by low public debt, ample international reserves and prudent macroeconomic management, but warned that higher energy prices, climate risks, infrastructure gaps, a narrow production base and outward migration continue to constrain medium-term growth.
The IMF recommended that fiscal policy continue providing targeted support to vulnerable households while avoiding broad fuel subsidies, which it described as costly, regressive and difficult to unwind.
It also urged improvements in public investment management, fiscal reporting and debt management to safeguard long-term fiscal sustainability.
On monetary policy, the IMF said the Central Bank of Samoa should maintain its current policy stance while remaining alert to inflationary pressures stemming from higher fuel prices.
It also recommended stronger liquidity management and reaffirmed that Samoa’s exchange rate basket peg remains an appropriate anchor for macroeconomic stability.
The Fund said financial sector risks remain contained but called for closer monitoring of lending by public financial institutions, stronger supervision and reforms to improve access to finance for businesses.
It also stressed the importance of protecting correspondent banking relationships and strengthening anti-money laundering and counter-terrorism financing measures ahead of Samoa’s 2027 Mutual Evaluation.
Looking beyond the near term, the IMF said accelerating structural reforms would be essential to improve productivity, diversify the economy and address labour shortages through better investment conditions, improved access to finance and stronger human capital development.
