Major economic indicators down

Major economic indicators plummeted during the first three months of the year compared to the same quarter last year, including a $44.4 million decline in garment export, a $5.14 million drop in business gross revenues, a $4.8 million drop in remittances, and a 3-percent drop in tourist arrivals.

All these give credence to a recent independent economic forecast that the CNMI economy will be bleaker this year than last year, and the possibilities of reinventing the now desperate economy are increasingly slim.

Government spending also exceeded general fund revenue derived from collected taxes and fees by over $5 million in the first quarter, the latest Economic Indicator Report released by the Department of Commerce shows.

The government collected only $34.847 million between January and March, but spent $39.86 million.

Government spending and collection dropped by 9 percent and 13 percent, respectively, from a year ago.

Business gross revenue, which is the total sales of businesses in the CNMI, reached only $411.48 million in January to March, a 1.2 percent or $5.14 million decline from last year.

Weak sales

As consumers hold on to their dollars because of a general downturn in the economy, small to large businesses report decline in sales.

“Our sales are down 10 to 20 percent in 2008 compared to 2007,” Amelia Domingo, store manager of Taro Sue Store on Middle Road, yesterday said. The store sells furniture and household wares.

Domingo said their major customers—hotels and apartment owners—seldom buy new furniture these days because of a decline in hotel guests, while apartments do not see new tenants and therefore they don’t need to change their dining tables, beds and sofas.

“Businesses like us now charge lower for the items we sell and still our profits are low. The economy is just not that good,” she added.

On Saipan, many new and old commercial buildings are now empty and the chances of finding new tenants are slim, as a number of businesses are closing. Since April, Saipan completely lost its garment industry, as the last income from a factory was reported in March. Retail stores and other businesses near former garment factories are also now empty.

Popular businesses also were not spared from the economic slowdown during the first quarter, including the closures of Island Locator, Jollibee, Hawaii Bar & Grill, Green Flash Restaurant, Mary’s Restaurant and X-Colors.

Dismal

Press secretary Charles P. Reyes Jr. separately said the latest Commerce report continues to show the “dismal” state of the economy, which is affected by federalization, minimum wage increase, slowdown in arrivals especially from the main market of Japan, a weak Korean won, the U.S. financial meltdown and the global financial crisis.

“Federalization creates uncertainty. It is discouraging investors. They are still in a wait-and-see mode because we haven’t seen yet the investor regulations and the labor regulations, only the visa waiver rules which restrict our access to the Chinese and Russian tourist market,” Reyes said.

Less money circulating

Banks’ total deposits went down to $450.23 million, from $515.53 million last year during the first quarter. Total loans also plunged to $136.42 million, from $156.72 million a year ago. This brings the loan to deposit ratio to 30.3 percent, a slight decrease from 30.4 percent during the first three months of last year.

The exodus of thousands of nonresident workers due to the closure of garment factories and other businesses was reflected in remittances, which went down by $4.8 million or 23 percent—from $20.8 million to $16 million in the first quarter.

Sales of new vehicles also dropped by 32 percent between January and March, from 300 last year to only 188 this year.

Visitor arrivals reached only 107,434 during the first three months of 2009, compared to 110,690 last year, a 3-percent drop.

The economy is expected to worsen in 2009, with the Marianas Visitors Authority projecting $339 million in lost tourism revenue each year due to federalization, flight reductions and a drop in tourism arrivals.

The average hotel rate stood at $99.99, from last year’s $101.10. Hotel occupancy averaged at 73.2 percent in the first quarter, a slight increase from last year’s 70.6 percent.

Zero exports

Because of low demand for goods, the CNMI’s total import tonnage reached only 79,340 tons in the first quarter, from 93,460 last year. The imports include petroleum, oil, lubricants, cement, garment, food items, construction materials and beverages.

The CNMI saw a $44.4 million drop in exports because of the demise of the garment industry. From $47.54 million in garment export last year, the figure went down to $3.14 million this year. By the second quarter, the CNMI no longer had any export to speak of.

The total value of construction during the first quarter stood at only $2.33 million consisting of 33 projects, from $4.94 million last year with 57 commercial, residential and government projects.

Besides hotel occupancy, which slightly rose during the first quarter, the number of telephone lines also went up by 5.2 percent or 1,498—from 28,631 last year to 30,129 this year.

Commerce Secretary Michael J. Ada said the first quarter economic indicators report depicts the “social and economic conditions” of the CNMI from January to March.

Other reports published by Commerce are available online at www.commerce.gov.mp/new.