Joseph P. Breadley, senior vice president and economic and market statistics officer for the Bank of Guam, foresees a lower level of economic activity in the CNMI compared to the last 23 years.
“There’s a very high number of nonresidents, noncitizen workers here and there’s going to be fewer and fewer jobs available and so by reducing the number of non-immigrant workers it is going to help stabilize the economy,” Breadley said, in an interview.
There will also be a reduction of government workers as the private sector pays higher wages as mandated by the federal minimum wage law, which now applies to the CNMI.
But, Breadley said, “I don’t feel very comfortable for the future of CNMI. The economy, I think, will go through a very difficult transition period. I think the transition will take longer than five year. And I think it will probably take 10 years. And what you see today as the economy of the Northern Marianas will look very much different 10 years from now.”
Breadley said it would be very difficult to persuade the federal government to include the Russians and Chinese in the visa waiver program.
He talked about “Islands in the Storm: The Global Economic Meltdown and the Western Pacific” during the Second Annual Pacific Mayors Conference on Friday.
Recession
Breadly said the global recession will reduce fuel and energy prices which will also reduce the cost of shipping to the CNMI.
He added that low air fare will also ease some of the downward pressures on local tourism.
He said the CNMI has been hurt the most by the demise of the garment industry, which has already relocated to countries with cheaper labor costs.
“Business will be very tight not only for the CNMI but for the whole world as long as this recession is ongoing because people want to stay home — they want to keep their money at home,” Breadley said.
Options
However, Breadley said the CNMI still has economic options.
The establishment of an industrial zone near the airport and seaport of Saipan is still viable, he said.
The enormous space in those areas can be utilized by a small scale manufacturing and processing plant.
“I think that the CNMI can [also] engage in telemarketing with U.S. and Canadian products to Asia and then store those products here so that instead of taking three weeks to get from the U.S. to Asia it will only take a matter of few days,” Breadley said.
He noted, however, that the swine flu concerns are making the global economy worse, and it will also affect the CNMI.
The devaluation of the dollar, the increase in dollar-based interest rates and federalization will all impact the CNMI, he added.
Breadley said economic conditions will likely worsen because “jobs are still being lost, incomes are still falling, the credit markets are still very tight, and the stimulus programs are not yet sufficient.”
He said the recession will last for a long time and inflation will eventually take hold as interest rates rise, choking recovery.
Trade will be weak and “international tensions may increase,” he added.
