GEDA: Economist’s views are conservative

Posted on Sep 09 2022

TAMUNING, Guam—The Guam Economic Development Authority respectfully disagrees with a recent article concerning Guam’s economic progress. 

“When Guam Economic Development Authority visits with investors, we make our best efforts to tell a complete story about the economy. In a recent article in the Guam Pacific Daily News, a reporter quoted some opinions followed up by data by well respected economist and professor, Dr. Claret Ruane. We believe her views to be highly conservative and not taking into account the many factors that contribute to the economic recovery of our island,” said Melanie Mendiola, CEO/Administrator of GEDA. 

While GEDA appreciates and respects Ruane’s academic point of view, the agency believes her forecasts in this matter to err on a much more conservative front. In 2019, she projected negative to flat growth. Instead, growth was documented at 2.5% by the Bureau of Economic Analysis (BEA). In 2020, when tourism was gutted, Dr. Ruane projected as much as a 18.9% retraction, but BEA documented GDP to be at a negative 11.9%, cushioned by growth in government and federal construction spending. 

Since then, GEDA said the Department of Public Works has approved nearly five times the volume of work than previous years’ average, likely a combination of pent up COVID demand and a slightly easing labor supply. This is not inclusive of work on military bases of which, $571.2 million authorized in the 2021 NDAA and $765 million on the table for FY2022. 

GEDA added tourism continues to emerge from its nadir, with the support of multiple programs federal and local including PPP, EIDL, Pandemic Assistance Grants, Commercial Rent Assistance Grants, and LEAP. Tourism numbers are performing ahead of projection and while we are not where we were pre pandemic, resources have been allocated to the airport and GVB. Additionally, employment numbers across all sectors are up with overall unemployment around 5%. 

 “We very much appreciate Dr. Ruane’s clarification concerning the spending of ARP which she originally forecasted to take place over one year versus the four years allowed by statute. ARPA funding is intended to be disbursed over four years with a final commitment date of 2024,” said GEDA.   

To clarify, GEDA said the use of ARPA interest, interest earned on ARPA funds (and there is not $577 million in the bank account as funds have been disbursed as shown in the published monthly report) may be retained by the government of Guam, by exception, and is added to the available ARPA funds—not the General Fund. 

“Currently, there is about $303 million in an interest earning account but interest rates have been less than 1% only recently increasing.  We have earned about $0.6 million to date from deposited balances.  These funds, although supporting ARPA funded commitments, cannot be significant to the big economic picture.  

 GEDA continuously involves multiple stakeholders in its planning and execution of economic recovery efforts, including the Guam Chamber of Commerce, Women’s Chamber, Chinese Chamber, Korean Chamber, GHRA, and multiple individual businesses and stakeholders who volunteer their time towards the recovery efforts of our island. 

“We are happy to have Dr. Ruane’s data to add to the body of work on economic recovery being undertaken by the University of Guam, the Government of Guam, and our many private sector partners,” it said. (PR)

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