CNMI urged to monitor dev’t in Asian economies

Government and business leaders should remain vigilant on the developments in major economies in the mainland Asia since these are likely to give the CNMI a peek of what is in store for the islands’ economy, according to the Department of Commerce.

Commerce officials said growth and stability of the United States economy has too little impact on that of the Commonwealth’s, especially with majority of businesses on the islands still cater to foreign tourists who are mostly from Japan and South Korea.

“Although the CNMI is affiliated with the United States which has been experiencing robust growth in its economy, the same does not hold true for us. Our economy is dictated by events that happen in neighboring Asian countries,” DOC’s David S. Palacios said.

Mr. Palacios added that unless the economies of major Asian countries like Japan and Korea rally stronger and eventually stabilize, business activity in the Northern Marianas will remain at its current pace.

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.

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

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.

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.

Japan Airlines previously projected that stabilization of the Japanese economy and the tourism market is expected to take place by not later than 2001.