Kilili: CNMI economy rose in 2021, 2022

Delegate Gregorio Kilili C. Sablan (D-MP) disclosed over the weekend that after years of decline due to the COVID-19 pandemic and Super Typhoon Yutu, the CNMI economy started to come back in those two years, rising 5.1% in 2021 and 16.7% in 2022 after decreasing 29.1% in 2020.

Sablan in his e-kilili newsletter noted the economy’s improvement based on the U.S. Department of Commerce Bureau of Economic Analysis’ 2021 and 2022 Gross Domestic Product statistics for the CNMI released last Thursday.

GDP refers to the value of the goods and services produced by an economy less the value of the goods and services used up in production.

The delegate said the 2022 improvements were due to increased tourism, business equipment investment, and government spending, particularly U.S. Air Force construction work on the Tinian divert airfield.

He said net consumer spending fell in 2022, however, as price increases outpaced the value of the dollar.

On the CNMI’s GDP for 2022, according to the Bureau of Economic Analysis news release, the growth in real GDP from 2021 to 2022 reflected increases in exports, government spending, and private fixed investment.

BEA said these increases were partly offset by a decrease in personal consumption expenditures or PCE.

BEA noted that imports, a subtraction item in the calculator of GPD, increased.

Exports increased 324.9% and this was accounted for by exports of services, which consists primarily of visitor spending.

According to the CNMI government’s statistics, visitor arrivals increased 656.4% in 2022.

BEA said government spending increased 4.7%, reflecting increases in both territorial and federal government spending.

Territorial government spending increased 3.3%, supported by federal grants.

The grants include the Coronavirus State and Local Fiscal Recovery Funds payments and Education Stabilization Fund payments authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act of 2021; and the American Rescue Plan Act of 2021 (ARPA).

BEA said the federal government spending increased 22.8% and such increase reflected construction spending associated with the U.S. Air Force’s Tinian Divert Airfield project.

The CNMI’s private fixed investment increased 3.8%, primarily reflecting an increase in business spending on equipment.

The personal consumption expenditures decreased 3.3%, reflecting an increase in consumer prices that outpaced the increase in current-dollar PCE.

Regarding the CNMI’s GDP for 2021, the BEA noted that the growth in real GDP from 2020 to 2021 reflected increases in government spending and personal consumption expenditures.

These increases were partly offset by declines in exports and private fixed investment.

Imports, a subtraction item in the calculation of GDP, increased.

Government spending increased 19.2%, reflecting increases in both territorial and federal government spending.

BEA said territorial government spending increased 19.9%, supported by federal grants such as the Coronavirus Relief Fund payments and Education Stabilization Fund payments authorized by the CARES Act and the ARPA.

Federal government spending increased 11.2%, primarily reflecting an increase in federal reconstruction activities related to Super Typhoon Yutu.

BEA said personal consumption expenditures increased 11.1%, supported by government assistance payments distributed to households through the CRRSA Act and the ARPA.

Exports decreased 58.1% and this was accounted for by exports of services, which consists primarily of visiting spending.

According to the CNMI government’s statistics, visitor arrivals decreased 85.7% in 2021. BEA said private fixed investment decreased 6.4%, reflecting a decline in business spending on structures and equipment.

Pertaining to CNMI’s GDP by industry and compensation by industry for 2021, BEA said that in 2021, real GDP increased 5.1%.

BEA said based on the newly available GDP by industry data, the government sector was the primary contributor to the increase.

The government sector increased 13.2%, primarily reflecting growth in compensation of territorial government employees.

The private sector increased 0.6%, reflecting an increase in “other private industries,” such as professional services and construction.

BEA said the increase was partly offset by a decline in accommodations, food services, and amusement.

The number of visitor arrivals to the CNMI decreased 85.7% in 2021.

Total compensation increased from $578 million in 2020 to $604 million in 2021.

BEA said the $26 million increase was mostly accounted for by an increase in territorial government compensation.

With respect to the CNMI’s GDP by industry and compensation by industry for 2020, BEA said that in 2020, real GDP decreased 29.1%

BEA said the private sector was the primary contributor to the decline, according to the newly available GDP by industry data.

The private sector decreased 40.6%, reflecting widespread declines as businesses throughout the CNMI operated at a reduced due to the pandemic.

According to the CNMI government, visitor arrivals declined 81.7% in 2020.

BEA said additionally, casino gambling revenue dropped over 95% in 2020 according to publicly available financial statements.

The government sector increased 9.7%, primarily reflecting a reduction in the operating losses of government utilities, whose expenditures returned to normal levels following several years of elevated spending in the aftermath of Super Typhoon Yutu.

Total compensation decreased from $701 million in 2019 to $578 million in 2020.

BEA said the $123 million decrease reflected widespread declines in private-sector compensation including accommodations, food services, and amusement, other private industries, and wholesale and retail trade.

Sablan said the Marianas GDP reports for these two years were delayed because of the lack of audited financial statements from the Commonwealth government and had to rely on estimates.

BEA said that as of November 2024, the CNMI government-wide audited financial statements were not available for fiscal year 2022 or 2023.

In the absence of these key data sources on government spending, BEA used alternative methods to estimate expenditures.

Sablan said these GDP reports will be the last produced by BEA for the Marianas and other insular areas, as the U.S. Department of the Interior has decided to end its support of the work.

The annual publication of BEA’s GDP statistics for the CNMI is made possible through funding by the Office of Insular Affairs of the DOI.

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