Commerce sees turnaround in local economy

The path toward recovery is the only direction left for the CNMI economy to take after having been knocked down by strings of financial upheavals caused by the currency crisis in major Asian countries, the Department of Commerce said.

Citing the prevailing business cycle pattern, acting Commerce Secretary David S. Palacios said the local economy has already reached rock bottom as indicated by the closure of too many businesses since the onslaught of the recession in 1997.

“No one economy is immune to disturbances in the business cycle. Each goes through a cyclical fluctuation, be it peak, contraction, trough, or expansion,” Mr. Palacios added.

After hitting the trough phase last year, the commerce official said the next phase for the heavily battered Northern Marianas economy would be to expand or grow.

However, recovery will not be so encouraging since the local economy is not likely to escalate up to the pre-crisis level. Any growth rate will have to be compared to the low level of economic activities during the recession.

Mr. Palacios explained that while some areas of the CNMI economy depends on the strength of the United States, most of the existing business activities in the Northern Marianas largely cling on how Asian economies are performing.

“Our economy is dictated by events that happen in neighboring Asian countries, Until such time that the economies of these Asian countries are stabilized, our economic position will remain as is,” he added.

He said the CNMI government has been exploring ways to diversify the island’s economic base to mitigate the effects of financial upheavals in Asia, especially in Japan and Korea, the biggest market for the island’s tourism industry.

Mr. Palacios noted efforts to evaluate the merits of a Free Trade Zone, as well as to encourage foreign carriers to provide air transport service between Saipan and new international routes.

“Clearly, it is only by working together as a community that we can change the future course of our islands for the better, the commercial official said.

Government officials are upbeat on projections made by experts from the Bank of Hawaii that the local economy is expected to register a modest growth of no more than two percent this year.

While the projected growth rate appears to be low, economists said the figure is good enough amid current conditions wherein major Asian countries continue to reel from the two-year old financial upheavals.

Reports also noted that the CNMI economy is projected to pick up to 3-4 percent next year when more Japanese and Korean travelers begin taking overseas trips again.

However, Saipan’s economic recovery will have to be spurred by a turnaround in tourist traffic which would cause growth in business receipts, employment, taxes and the rest of the economy.

Experts also downplayed further growth in the apparel manufacturing sector since it has already reached mandatory peak for active licenses and employment due to the cap in the number of apparel factories and nonresident workers it may employ.