KEY POINTS:
APIA - Even the quiet haven of the Pacific Islands is not immune from the global financial crisis.
The island nation of Samoa is concerned that a key part of its economy could be under threat.
There are fears that the flow of money from relatives working abroad in New Zealand and Australia - known as remittances - could dry up, with the recession biting hard into employment.
Remittances are not just the lifeblood of a big part of the local community, they also account for 24 per cent of the Gross Domestic Product (GDP), accounting for approximately $128.2 million tala per year.
However, the worry may be unfounded, as the expats' unemployment benefits may prove to be enough to cover the sums sent home to families in Samoa.
Samoan banks report an increase in the total income sent home for local families in the last quarter of 2008.
According to the Central Bank of Samoa (CBS), estimates so far point to a seasonal expansion in December 2008 rising 40 per cent from November 2008.
"The gross inflow of private transfers stood at $34.8 million, a level that largely represented increased remittances to households for family support ahead of the Christmas holidays as well as funds for charitable organizations.
"The total inflow of private transfers in the first six months of 2008/09 was consequently higher by 4.5 per cent at $179.4 million, compared to $171.7 million in the same period of 2007/08," CBS Stated.
According to CBS Manager of Statistics and Research Iosefo Bourne, as more and more Samoans are made redundant as a result of the recession, there was a fear that this would lead to decreased remittances to local families.
"Obviously as Samoans overseas lose their jobs they would not be able to afford to send home as much money," Bourne said.
Asked as to the impact of the dole, he said: "Hopefully the dole would save the remittances and maintain it at a healthy level, however there are pressures on Samoans overseas and the dole may not be enough."
If this does not come through, Bourne says they predict a slowdown in remittances as Samoans overseas feel the pressure recession.
"We do forecast that remittances will take a hit," Bourne said.
But Samoa is not the only country who could suffer.
According to the World Bank, remittances to the Pacific region tripled over the past decade to reach US$425 million (A$519 million).
Although Samoa is noted as a high recipient, Tonga and Fiji are on par.
Remittance receipts account for a growing percentage of the country's GDP, according to the World Bank the imported dollars amount to 41.9 per cent of Tonga's GDP and 6.7 per cent of Fiji's GDP.
"The cash that immigrants send home is a vital source of income for the daily survival of Pacific Islands households," said Dr Manjula Luthria, a senior economist with the World Bank's Pacific office.
Samoa is still very much dependent on the foreign dollar as a source of income.
