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By Gaynor Dumat-ol Daleno

HAGATNA, Guam (Pacific Daily News) - The levels of activity in the two main engines of Guam's economic growth -- tourism and national defense -- are rising, although for different reasons and with different effects on Guam's economy, the labor market and public finances, states an economic report posted on the Department of the Interior Web site.

Regional economist Wali Osman wrote the report

Interior's Office of Insular Affairs announced in February that it has hired Osman, formerly the Bank of Hawaii senior fellow at the East-West Center think tank in Honolulu.

Osman described Guam tourism as being at an early stage of recovery and expansion, saying "gains in tourist traffic have to be registered for several months to be considered a turning point from the current stage of the business cycle."

By contrast, increases in defense spending, especially in force and personnel, refurbishment of base facilities and new construction projects tend to have a more noticeable effect, as some of these create immediate work opportunities, Osman said.

Now that both tourism and defense outlays are rising simultaneously, the prospect of recovery in Guam's economy is better than it has been in several years, Osman said, but added: "It is too early to suggest the depth and breadth of this recovery."

But if both tourism and defense spending rise consistently for four to six months, he wrote, "it will be possible to make a more quantitative assessment of gains in business, the tax base, public finances, employment and, eventually, total output."

Gov. Felix Camacho, in a written statement, said: "While we can expect more positive things to come for our people, we must look at this DOl report as an assessment of where we have to come and what we can do to improve our economy moving forward."

But while both tourism and military industries on Guam are showing signs of recovery, the Northern Marianas' two main industries are going in opposite directions, the report states.

The Northern Marianas tourism industry expects a 20-percent increase in total tourist traffic this year, which would raise total arrivals to about 570,000, the report states. Guam is aiming for more than one million visitors by the end of this year.

But the garment industry on Saipan, the Northern Marianas' main island, faces different challenges. As January 2005 nears, Saipan garment-makers would be expected to search for other markets where production costs may be lower, the report states.

June 4, 2004

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