Sluggish rally of local economy to persist

Northern Marianas is not likely to witness a significant growth in business activities this year but business analysts are optimistic the local economy will begin to stabilize after being badly hit by the two-year chaotic financial situation in the Asia-Pacific region.

Experts said sluggishness of the local economy will persist throughout, and may even fan beyond the year 2000 with both foreign and local investors practicing frugality due to the volatility of the CNMI business climate.

“The economy will remain stagnant. It may go up but at a very slow pace. We won’t see a drastic impact in terms of increase in economic activities but it has already reached rock bottom and it has nowhere to go but up,” said Commonwealth Development Authority Chair John S. Tenorio.

Observers are predicting that the downturn in economy caused by financial upheavals in Asia will stretch throughout the year and may even persist until beyond the year 2000.

Mr. Tenorio said initial signs of economic recovery may become evident this year although it will not be significant to mitigate losses incurred over the past two years due to the closure of at least 2,000 tour-related businesses.

The CNMI government is starting to see the merits of diversification as public officials explore the possibilities of establishing a free trade zone in the Northern Marianas.

Local businesses suffered adverse setback during the last two years when visitor arrivals, mostly Japanese and Korean travelers, to the Northern Marianas dropped by over 20 percent.

The continuous decline in visitor arrivals, which started slowly picking up only during the second half of 1999, gave rise to gloomy predictions on the developments in the local economy since this is generally intertwined with the economic activities in the neighboring Asian region.

Gov. Pedro P. Tenorio vowed to utilize all available means to prevent any adverse impact on the CNMI of the anticipated subsequent sink of economies of major Asian countries.

Economic forecasts in Japan has indicated that the yen may sink further to between 150 and 180 against the US dollar. The Japanese yen has weakened from Y118 in August 1998 to Y144 during the same period last year, hitting an eight-year low against the U.S. dollar.

The governor has called for a closer coordination between the Marianas Visitors Authority and the private sector, as well as the revitalization task force to come up with an economic blue print that would minimize the impact of the regional crisis to the CNMI.

“We have to work closely with MVA and try to get all the necessary things that we should do over here, again, to at least continue bringing in people to the Northern Marianas,” the governor said.

Aside from intensifying its promotional efforts in the existing tourism market, MVA has already started exploring the possibility of tapping travelers from other countries.

Japan overseas travelers, who are CNMI’s major market, have stayed home in record numbers, with only 7.425 million Japanese taking a trip out of the country from January to June last year, representing an 8.3 percent decline.