Guam economy in 2026: A delicate balance of growth and challenges

 By Jayvee Vallejera

Guam’s economists and business leaders forecast a positive—though potentially uneven—growth in the local economy in 2026, buoyed by military construction and a gradual increase in tourist arrivals.

For the most part, the pattern of economic activity in this election year mirrors last year, except for the emergence of the 3D printing industry, which is expected to position Guam as a manufacturing and training hub for Navy operators in the region.

However, the positive outlook will be tempered by persistent labor challenges, geopolitical tensions, the high cost of living and inadequate infrastructure, among other issues that will highlight this year’s campaigns for the gubernatorial race.

Melanie Mendiola, vice president of investment advisory firm BG Investment Services, describes Guam’s economic outlook for 2026 as “expansionary but uneven.”

Tourism, while still important, will not be the dominant driver of economic momentum, Mendiola said. She said the expected growth will be driven primarily by defense-related construction, infrastructure investment and associated professional and logistics services.

Gary Hiles

Gary Hiles, chief economist at the Guam Department of Labor, agreed that robust military and civilian construction could drive growth.

Hiles said construction activity associated with the Marines’ relocation from Okinawa to Guam was initially projected to peak in 2025 and begin to wind down through 2028. Military construction in 2026 is likely to exceed the 2025 levels due to expanded defense plans, he said.

“There are sufficient projects to support substantial construction increases in 2026; however, housing, the arrival of additional H-2 workers and other factors are likely to constrain this growth somewhat,” Hiles said.

Catherine Castro, president of the Guam Chamber of Commerce, said the business sector is cautiously optimistic amid a gradual tourism recovery.

Federally funded projects related to hardening Guam’s power grid and telecommunications infrastructure due to the damage caused by Typhoon Mawar in 2023 are also seen to play a significant role in Guam’s economy in 2026, Castro said.

Catherine Castro

While seeing the federal government’s investments in Guam as clearly positive, Castro noted that persistent structural challenges continue to impede business operations.

Among those challenges, she said, are high-priced housing, infrastructure strain, permitting and procurement issues and inconsistencies in government services. “Guam can have a

strong year if government decisions support, rather than strain, the private sector,” Castro said.

The chamber views Guam’s economic direction as generally forward-moving but fragile, Castro said. There are real opportunities for growth, but these must be matched by disciplined policy choices, she added.

“We acknowledge that the reduction in the business privilege tax will be beneficial for the economy; however, the concerns regarding inflation, costs of doing business and workforce shortages remain a real concern,” she added.

Economists agree that sustained U.S. defense posture investments in the Indo-Pacific will be the main drivers of Guam’s economic activity in 2026.

“Defense investment has emerged as a stabilizing anchor, helping to reduce volatility during periods of softer tourism performance,” said Mendiola, former administrator of the Guam Economic Development Authority.

ADVERTISEMENT

The geopolitical tension, however, is a double-edged sword. On the one hand, it guarantees sustained defense spending and construction, which create jobs and generate government revenue. On the other hand, it injects volatility into the picture, influencing investment sentiment, insurance costs and tourism.

“Geopolitics is both a demand and a risk that reinforces our need for diversification,” Castro said.

Regarding tourism, Hiles is optimistic about its potential to expand since much

of Guam’s hotel capacity remains available, and there are plans to reopen an existing hotel and build a new one.

The Guam Visitors Bureau’s arrivals forecasts for fiscal year 2026 are in three scenarios: conservative at 739,051, moderate at 874,517 and optimistic at 1,009,981.

Fiscal 2026 was off to a good start, with Korean arrivals up 16.6 percent and Japanese arrivals up 28.8 percent.

Guam also serves as a hub for airlines and benefits from broader economic activity across Micronesia and the Northern Mariana Islands. This means any changes in tourism performance or airlift in the neighboring islands also influence Guam.

“The addition of routes such as the Philippine Airlines flight between Guam and Cebu, for example, could introduce a new direct pipeline for both labor and travel demand,” Mendiola said.

While visitor arrivals and airlift are improving, Mendiola noted that the strong U.S. dollar compared to the Japanese yen and Korean won continues to make a huge dent in tourists’ spending power.

Fiscal 2026 was off to a good start, with Korean arrivals up 16.6 percent and Japanese arrivals up 28.8 percent.

Other essential multipliers that she says will also invigorate Guam’s economy include broadband improvements, local professional services, the hospitality industry and retail.

For Mendiola, it is not just individual firms but the growing ecosystem tied to defense construction, infrastructure resilience, aviation energy and advanced logistics.

That covers a host of industries that will support military and infrastructure projects, like contractors, subcontractors, service providers, industrial maintenance, local suppliers, transportation support and utilities, Mendiola said.

This is where the role of the Guam government is critical, she said.

“Policy decisions related to energy costs, permitting timelines, and infrastructure readiness can either enable or constrain emerging industries,” she said.

If these issues are not addressed, promising sectors can stall before they fully take root, Mendiola warns.

Castro said new emerging industries could further energize the Guam economy. These include advanced manufacturing and “just-in-time” production linked to defense supply chains, digital and remote services sectors, renewable energy, infrastructure upgrades and grid-resilience projects. Talks that take advantage of Guam’s strategic location, such as logistics and ship repair, also continue.

Other areas to watch, Mendiola said, are communications and utility modernization, specialized professional services and workforce development aligned with technical and engineering disciplines.

These industries may not replace tourism, but they meaningfully broaden Guam’s economic base, she added.

One of the most promising areas is the emergence of additive manufacturing, or 3D printing, tied to defense and industrial maintenance needs.

“It develops a workforce with highly transferable technical skills—skills that are valuable not only within additive manufacturing, but across multiple industries, should growth occur at a different pace than anticipated,” Mendiola said.

Hiles said that economic activities will adjust to changing demographics and emerging technologies.

Growth in the technology sector, driven by artificial intelligence and other cutting-edge technologies arising from Guam’s enhanced broadband capabilities, is also seen as a potential prime mover in 2026, Hiles said.

Citing the U.S. Department of Labor's Employment Projections for 2024-2034 forecast, Hiles said healthcare and social assistance will have the largest job growth and will be the fastest-growing industry sectors.

Hiles said that Guam’s unemployment rate continues to decline from the record high of 19.4 percent in December 2020. As of June 2025, it was just 0.1 percentage points above the U.S. national average. “Since then, Guam’s rate has remained below the U.S. figure, as Guam’s rate has declined while the U.S. rate has increased somewhat,” he said.

Hiles said total employment in Guam has steadily rebounded since the pandemic, with construction employment increasing, although growth slowed in 2025. Average hourly earnings have also increased in both the government and private sectors, he added.

Subscribe to

our monthly

digital edition