Report Shows Marked Increases In CNMI’s GDP

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Congressman says data provides ‘unclear message’

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, Dec. 3, 2013) – Tourism spending, as anticipated, was a "key" driver of a 5.2-percent growth in the CNMI economy in 2012 after posting a 6.8-percent decline in 2011, based on a new gross domestic product report that the U.S. Bureau of Economic Analysis released yesterday.

Gross domestic product or GDP is the sum of spending by consumers, the government, and businesses.

The CNMI’s real GDP—GDP adjusted to remove price changes—climbed to $593 million in 2012 compared to $563 million in 2011.

But this is still lower than 2010’s $604 million, an increase of 1.1 percent following six straight years of decline.

Moreover, the 2012 GDP of $593 million is nowhere near the over $1.2 billion in 2002 or $1 billion in 2005 when the CNMI still had two major industries: tourism and garment manufacturing.

The last garment factory on Saipan closed in 2009, and the GDP sank to $598 million that year.

But if it’s any consolation, while the CNMI’s GDP went up by 5.2 percent in 2012, American Samoa’s shrank by 2.4 percent that year, based on data that BEA released in September.

Press secretary Angel Demapan, when sought for comment, said the administration is pleased with the 5.2-percent increase for the CNMI, a "significant" figure especially when reports indicate that the U.S. as a whole recorded a 2.8-percent increase in GDP.

"The report pointed to tourism as a key driver. With the uptick in visitor arrivals as of late, the administration certainly sees the high demand for workers in the service industry to continue this trend in the CNMI’s economy," Demapan told Saipan Tribune.

In October 2013 alone, arrivals to the CNMI jumped 19 percent compared to the same month last year, or from 26,767 to 31,886, the Marianas Visitors Authority said.

Because of these positive indications, Demapan said the administration remains hopeful that the federal government will recognize the importance of extending the transition period for CW workers.

"Such an extension would give the CNMI ample time to implement employment training programs necessary to build a viable and competitive resident workforce," he added.

If the CW program is not extended beyond Dec. 31, 2014, the CNMI loses immediate access to some 12,000 skilled and professional foreign workers that the economy has relied upon for decades.

‘Unclear message’

Delegate Gregorio Kilili C. Sablan (Ind-MP), in a statement, said the 2011 and 2012 data "are sending an unclear message about just where we are headed."

"Though, of course, we all we want to believe that the strong growth in 2012 was the beginning of a trend that will continue," he said.

Sablan said the 2010 turnaround was largely the result of federal government grants to the CNMI and individuals from the American Recovery and Reinvestment Act.

"And that spending seemed to have halted the freefall in our economy," the delegate said of ARRA grants.

Citing BEA data, Sablan said fluctuations in tourism, as well as local government austerity measures, were significant contributors to the ups and downs in GDP in 2011 and 2012.

The drop in tourism was attributed to the earthquake and tsunami that struck northern Japan in March 2011.

"Being largely dependent on one industry, tourism, makes our economy vulnerable to external factors," Sablan said. "That is why it is so important that we diversify the sources of our tourism. When one of the countries that sends us tourists suffers a problem, tourists from other countries will not replace the loss. But at least our economy will have some cushion."

This is why the CNMI has to work hard to maintain the parole system that makes it easy for tourists from Russia and China to visit the Commonwealth, Sablan said.

"Looking at GDP should also remind us of the importance of keeping our population numbers up. Consumer spending is the bulk of GDP. Losing population, whether it is because people leave to find more opportunity or because of changes in immigration, hurts our economy. We cannot afford to lose any more population," he said.

BEA, a part of the U.S. Department of Commerce, began compiling GDP data for the CNMI and other U.S. insular areas in 2009 with funding from the U.S. Department of the Interior’s Office of Insular Affairs.

In a statement yesterday, BEA said the release of the 2012 data reflects a one-year acceleration in the availability of the GDP estimates for the CNMI.

The data still lags the national survey of GDP, which is released one month after the end of each quarter.

But island GDP is catching up, Sablan said.

BEA plans to release the 2013 insular GDP estimates in the summer of 2014.

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