House Ways and Means Committee chair Rep. Ivan A. Blanco (R-Saipan) described yesterday the pendulum-like swing of the CNMI’s economy—from a 28.6%-increase in gross domestic product in 2016, followed by a 20%-drop in 2018—as an “unheard of” development but it will ultimately come down to how the Commonwealth will deal with this large drop in the economy.
“In any way, we’re breaking barriers. I don’t know what economy in the world swings from very high 28.6 % to a very low 20% in GDP,” said Blanco, referring to the new U.S. Government Accountability Office report about the CNMI economy.
The GAO report stated that, although the CNMI economy grew in 2016 and 2017, it plunged in 2018 due to a sharp drop in tourist spending and casino gaming revenue following Super Typhoon Yutu’s severe destruction in October 2018.
GAO said the U.S. Department of Commerce’s Bureau of Economic Analysis reports that the CNMI’s GDP grew 28.4% in 2016 and 25.5% in 2017, which reflected continued growth in visitor spending, particularly for casino gaming. GAO said the GDP, however, fell by 20% in 2018, with a sharp drop in tourist spending and casino gambling revenues following Yutu’s destruction. According to the Bureau of Economic Analysis, revenue from casino gambling dropped over 50% in 2018.
Blanco believes the CNMI’s GDP was about negative 19% in 2011 but that number was later adjusted. “At that time, we felt it. We felt the pain. Our export, which is mainly on the tourism sector, was hit hard,” he said.
Now with this coronavirus outbreak, the CNMI is getting hit as well in the midst of recovery from Yutu’s devastation in 2018.
Once the GDP shows either a 5% growth or 5% decrease, that’s already very significant.
“But for us, it’s 20%,” Blanco said.
He likened it to the Biblical tale of Joseph and his dream about Egypt going through “seven years of plenty and then seven years of famine.”
Blanco said he does not know whether the CNMI is in the seven years of famine after having steady economic growth from 2012 to 2017, but whether the CNMI is in the midst of seven years of famine, what’s more important is how the Commonwealth will deal with the economic whiplash.
He acknowledged that the 64-hour cuts and other cost-containment measures that the CNMI government will implement are going to hurt but, if that’s the way the Executive Branch feels that the government needs to handle this 20% drop in GDP, they will work together, especially on how to resolve these issues that the Commonwealth is currently facing.