No more waiting with the Samoa model

What if we didn’t have to wait three months to find out how the economy was doing? Samoa seems to have answered that question – and it’s a model the Caribbean should seriously consider.

In many Caribbean countries, economic data arrives long after decisions have been made. Governments often rely on quarterly gross domestic product (GDP) reports that can lag by 90 days or more, even as public sentiment and market realities shift much more quickly. It’s like trying to steer a vehicle while looking only in the rear-view mirror.

Samoa, a small Pacific Island nation similar to our region, has found a solution to this problem. They’ve adopted a technique known as “nowcasting” – a method of estimating economic performance in real time using readily available data, such as tourism receipts, remittances, import figures and even market surveys.

With support from the International Monetary Fund (IMF), the Central Bank of Samoa developed three complementary nowcasting methods: the Bridge Model, MIDAS and U-MIDAS. The Bridge Model converts monthly or high-frequency data into quarterly estimates. MIDAS accommodates multiple types of data with varying timelines. U-MIDAS, the most flexible of the three, proved particularly effective during the pandemic when economic trends were harder to predict.

By integrating the outcomes of all three models, Samoa consistently produced more accurate forecasts than traditional methods. Importantly, these tools enabled the country to identify economic turning points, which is crucial for timely policy responses during crises such as COVID-19.

The strength of this approach lies not in sophisticated technology but in the innovative use of data that many governments already collect. The indicators used in Samoa’s model should be familiar across the Caribbean. They include: remittances from overseas, tourism revenues and arrival numbers, bank credit to the private sector, tax revenues, merchandise imports, agriculture market volumes and prices, foreign reserves and climate and weather-related indicators like El Niño.

None of these data sets is exotic; they are part of the monthly rhythm of most finance ministries, statistical offices and central banks in the Caribbean.

The implications for our region are profound. We face many of the same vulnerabilities as Samoa: small, open economies that are heavily reliant on tourism, remittances and external shocks.

Pandemics, hurricanes, inflation spikes and food price volatility have battered us. Yet, our decisionmaking processes remain slow and disconnected from real-time realities.

Nowcasting provides a path forward. It enables policymakers to anticipate trends rather than simply respond to them, thereby making economic planning more agile and responsive. Additionally, it can potentially restore public trust by demonstrating that decisions are founded on timely evidence, not outdated statistics.

A regional approach to nowcasting would be sensible. The Caribbean Community, the Organisation of Eastern Caribbean States and the Eastern Caribbean Central Bank could facilitate the development of shared forecasting models and training programmes. Member states could collaborate on the selection of indicators and methodological design, adapting Samoa’s experience to Caribbean circumstances.

This would not necessitate enormous new budgets. It would require political will, institutional coordination and a cultural shift towards valuing and acting on what is already known within public agencies.

Samoa’s success demonstrates that small island states do not require substantial technology investments to make more informed economic decisions. What is needed is intention, discipline, and the courage to adapt to changing circumstances.

In an age where each day counts – whether for budgeting, stimulus delivery, debt management, or disaster response – guesswork is a luxury we cannot afford.

The Caribbean must cease waiting for the data to arrive. It’s time to commence nowcasting.

Julian Rogers is an experienced Caribbean journalist and regional affairs analyst. He authors the Caribbean Bridges Substack column. Contact him at julian@caribbeanbridges.com.