What’s in store for the year ahead?

January 17, 2020

 

 

 Local economists and industry stakeholders are quite cautious but generally upbeat. Guam’s economy is positioned for continued and likely increasing modest growth in 2020 and 2021, according to government economist Gary Hiles.

 

 

“There are leading indications that the three primary sources of inflows of funds to Guam from tourism, federal expenditures, and construction capital investment are likely to simultaneously increase up to and during the outlook period,” Hiles said.

 

 Over the years, he added, Guam's $5.8 billion economy has exhibited remarkable stability and expansion, with gross domestic product consistently increasing every year since 2006 in nominal dollars despite the slow growth. Guam’s economy grows at an annual average of 1 percent.

 

Hiles said the trend of continuing modest economic growth is expected to continue and increase from the FY2017 and FY 2018 levels.

“During these years growth was constrained by limited construction labor supply with declining numbers of temporary foreign workers and a sharp decline in Japanese tourism arrivals due to international tensions between North Korea and the United States,” Hiles said.

 

Guam is entering a crucial period. With the Marines’ relocation from Okinawa to Guam scheduled to begin in the first half of the year, the island will soon see a changing landscape. More defense projects are in the pipeline.

 

 

James Martinez, president of the Guam Contractors Association, estimates $2.665 billion worth of projects are scheduled under the fiscal 2019/2020 defense budget. Ongoing projects under the Defense Policy Review Initiative are estimated at $650 million, while non-DPRI projects are estimated at $320 million.

 

The local government also has ongoing projects that will spill into 2020. The Department of Public Works has a total of $88 million worth of projects, while the Guam Waterworks Authority has a $35.7 million undertaking.

 

 

Despite the continuing labor deficit, construction in the private sector has not abated. Ongoing projects include residential housing development ($83.8 million); warehouse construction ($25 million) and retail construction ($20 million). Japanese retail store Don Quijote plans to open a large retail discount store on Marine Corps Drive in Tamuning in two years.

Asian tourists wait in line to be processed at the Guam International Airport on Jan. 4, 2020. Photo by Mar-Vic Cagurangan 

 

The tourism industry expects a busier year ahead as well, galvanized by last year’s performance. According to the Guam Visitors Bureau, the final two months of Fiscal Year 2019 broke new records, resulting in Guam achieving its best fiscal year to date with a total of 1.63 million visitors, yielding approximately $946.5 million in spending. According to GVB, Guam’s winter season is seeing additional 115,000 more seats through March 2020.

 Asian tourists wait in line to be processed at AB Won Pan International Airport Guam on Jan. 4, 2020.

Photo by Mar-Vic Cagurangan

 

The Tourism 2020 strategic plan, which envisioned to transform Guam into a world-class, first-tier resort destination of choice, is anticipated to come into fruition.

 

“Guam is currently enjoying a middle-class market. Our aim is to shift to the affluent market,” said Ken Yanagisawa, general manager of The Tsubaki Tower. The 340-room luxury hotel in Tumon’s ocean front is scheduled to open on April 25, 2020. “This is one of the highest luxury hotels in Tumon.”

 

Yanagisawa said The Tsubaki Towers, a 5+ star facility that targets luxury travelers and MICE market, will be the “completion of achieving Guam’s 2020 goal.”

 

Owned by PHR Ken Micronesia and Premier Hotel Group, The Tsubaki Towers will open 340 local jobs, Yanagisawa said.

 

But while the momentum for growth is building, Hiles said one must be recognized that “there is a myriad of global economic and political uncertainties including possible natural disasters which could impair the continued growth scenario.”

 

On the political front, candidates are beginning to flex their muscles. Political signs are beginning to sprout around the island as politicians get ready to hit the campaign trail for the November 2020 midterm elections.

 

 The Leon Guerrero administration, now entering its second year, sets its new objectives —albeit some are quite vague— for 2020.

 

“Our goals are simple:  to deliver on the promise of a safer, fairer, and more compassionate Guam,” said Janela Carrera, the governor’s communications director.

 

In the coming weeks, she said, Adelup will roll out a comprehensive initiative to reinvest in public safety, place more cops on the street, and put justice back on the side of law-abiding citizens.  

 

 “To do that, our political will must match our government’s wallet. That means one year of fiscal discipline isn’t enough. We must continue to cut our deficit—just like we did this year and improve our cash flow—only then can we pay our vendors on time and end the practice of spending today’s money on yesterday’s obligations,” Carrera said.

 

 

 The ailing Guam Memorial Hospital continues to find cure. “Whether through a new facility or a dramatically renovated one, GMH must be ready for a new decade of healthcare on Guam,” Carrera said.

 

The education sector also expects to see new construction. Adelup is preparing to break ground on a new home for the Simon Sanchez sharks. “At every step, we have worked with Guam Department of Education to get this done. Now, we must put shovels in the ground,” she added.  

 

“Finally, we must rapidly build our safety net for mental health and addiction treatment. Without it, no plan will meaningfully cure the crime in our communities or the pain caused to our families.

 

“While our challenges are great, our strength comes from the grit and resilience of our people,” Carrera said. “Steadied by this knowledge and with profound faith in our people, we look forward to the work to come, and we will work until it’s done.”

 

                                                                   

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