For its 2011-2012 edition of its Economic Forecast for both Guam and the CNMI, FHB’s report detailed the continuing struggle of the economy.
For FHB, the ramifications of the March 2011 tsunami in Japan, local businesses facing weak demand, 66 percent uptick in labor costs since 2007 and rise in fuel and shipping costs combine to pull down the CNMI economy’s performance.
The most prominent indicator was tourism, which according to FHB “has been on a decline” and “took a turn for the worse as a result of the tsunami in Japan.”
Based on FHB’s report, there has been a downward trend in tourism for several years, declining 30 percent from 2005 to 2009. Although figures rebounded in 2010, there was a 15.07 percent drop between Jan. and Sept. 2011 compared the same period in 2010.
Reduction in flights in July this year was also culpable in the downward tourism numbers.
The FHB report recognized that Fly Guam offered a glimmer of hope for the struggling tourism industry not only in the CNMI but also in Guam, as it offered affordable flights for tourists from China, Hong Kong, Palau, Nagoya, and Taipei; however, the full effect remains to be seen as the airline suspended flights for some destinations following the sale of the 51 percent of the airline’s interest to Los Angeles-based Triyar Capital. But expanded service remains a promise by the airline as it plans to resume flights in December.
As for the Korean market, there was a 17 percent drop in tourist arrivals, significantly impacted by the reduction of flights from Seoul and Busan.
The FHB report indicated recovery may be in the offing as Asiana Airlines plans to bring additional flights using bigger aircraft in the coming months.
As other tourism numbers waned for both Japan and Korean markets, it was the contrary for both Russian and Chinese markets whose increased tourism arrivals lent credence and support for the two countries’ inclusion in the visa waiver program.
FHB also noted the Bureau of Economic Analysis report in July 2011 that the estimated Gross Island Product or GIP decreased by almost 20 percent between 2008 and 2009.
In 2010, FHB reported BEA’s findings that the CNMI’s declining Gross Island Product, was down 4 percent in real terms and 6 percent in nominal terms from 2002 to 2007.
