Japan's recovery carries mixed blessings for CNMI

Japan will recover sooner than its neighboring countries. However, it will bring mixed blessings to the CNMI, according to David McClain from the College of Business Administration of the University of Hawaii.

McClain is on Saipan to discuss the impact of Asia’s Economic Crisis in the Pacific during the CNMI’s economic conference scheduled today at the Hyatt.

He said the economic recovery of the number one visitor of the CNMI will rely on its yen which unfortunately is also depreciating. Based on this projection, the CNMI should not expect an early comeback of the Japanese and other Asian tourists.

Reports have said that one of the popular products in Japan right now is the home safe which means people are not keeping their money in the banks. Japanese are also not spending and traveling.

If one will consider Japan’s long term potential growth, the picture is neither rosy, he added.

“This is a problem for the CNMI because Japan’s economic growth is sluggish,” he said in an interview.

Its sluggish growth will not do good to its neighboring Asian countries and may even deepen political instability in the region.

But security issue in the region will place the CNMI and Guam in a strategic military position for the U.S. government.

“The region’s more complex security environment may benefit the CNMI but it is complicated,” he said.

With the U.S. military presence in the CNMI, federal funding is expected to increase and spur economic activities. But the tension between China and the U.S. will bring other concerns to Micronesia.

Diversification, the other route the CNMI is poised to take, is a tough task to undertake.

He said Hawaii for example was listed among the top 20 most diversified state way back in 1969. Its diversification standing went up to no. 45 in 1997.

“I’m not ready to be optimistic yet,” he said.

In his report, McClain quoted Julian Schweitzer from World Bank who said Asia will recover. But it will undergo two phases. The first one will happen in the next 6 to 12 months, while the second phase will take several years, she said.

Can CNMI help Asia? McClain brings the question back to local leaders and businessmen.