Guam’s economy is on track this year to do as well or better than it did in 2012, thanks largely to a continuation of its tourism boom and low inflation, according to a report released today by First Hawaiian Bank.
Visitor arrivals through the first four months of the year are running ahead of the same period in 2012, which was the strongest year for tourism on Guam since the mid-1990s.
"In 2013, visitor arrivals are up more than 5 percent through April compared to the same period last year, suggesting this year will top 2012’s total despite some challenging events," said the report’s author, Maria Claret M. Ruane, an economist at the University of Guam-Pacific Center for Economic Initiatives.
Factors that could hurt Guam’s visitor industry include the fatal stabbing of three tourists in February, uncertainty created by nuclear missile threats from North Korea, and a weakening of the yen that reduces the buying power of visitors from Japan, Ruane said.
Nearly 71 percent of all visitors to Guam during the first four months of this year were from Japan, according to the Guam Visitors Bureau. That was down from about 74 percent during the same period in 2012.
However, the share of visitors from South Korea during the January-to-April period rose to about 16 percent of the total visitor count, up from about 12 percent during the first four months of last year.
"Although some markets are growing and some are slowing, Guam’s overall tourism has been vibrant due to increased flights connecting it to its tourist markets," according to the report.
On the inflation front, prices increases remain subdued in 2013 after rising just 3.2 percent in 2012.
"Guam continues to enjoy another year of low inflation with little threat of increase in the near future," Ruane said.
Job growth, which had been relatively flat since the 2008-2009 recession, increased 1.4 percent between March 2013 and March 2012, according to the report. An increase in hiring in the private sector has more than offset declines in government jobs, both federal and local.
A six-year delay in the transfer of 5,000 U.S. Marines from Okinawa to Guam has raised concerns that the transfer might never happen, Ruane said. However, recent comments from U.S. military officials suggest the long-awaited transfer might happen by 2020, according to Ruane.
She also noted that President Barack Obama’s proposed budget for fiscal year 2014 included $494 million for military construction on Guam.
First Hawaiian Bank operates three branches on Guam and two in the Commonwealth of the Northern Mariana Islands.
