Confirming what officials in the territory already knew, federal estimates released this week showed that the territory’s gross domestic product (GDP) grew at a steady rate between 2002 and 2007, outpacing the other U.S. insular areas and the nation as a whole.
"Through these estimates, we see that the territory has had modest economic growth for the past few years, so that’s definitely good for us," Lauritz Mills, head of the territory’s Bureau of Economic Research, said Friday. "It shows that we do in fact have a more robust and diversified economy than some of the other years, and there’s still a lot of potential for growth. And what’s also encouraging is that the estimates we’re seeing were in line with our own."
Unlike the states, where the federal Bureau of Economic Analysis is required to generate these kind of numbers, there is no such mandate for the territories, so the local Bureau of Economic Research has done much of its own legwork for years.
More recently, however, the Interior Department’s Office of Insular Affairs has begun funding the development of a framework for measuring GDP within the territories, and through a Memorandum of Agreement has enabled Bureau of Economic Analysis officials to work hand in hand with each of their counterparts on the local level to compile the first set of estimates.
"The officials came down, we discussed the data and what the requirements were, and over the past year, we’ve been sending them the information and results, so what you have here is what has come out of that process," Mills explained.
The estimates released this week show that GDP grew in three out of four of the territories from 2002 to 2007. During this time, the average annual rate of growth in American Samoa was .4 percent, while Guam’s grew annually by 1.8 percent and the Commonwealth of the Northern Mariana Islands actually decreased at an average annual rate of 4.2 percent.
According to a release from the U.S. Bureau of Economic Analysis, part of the Commerce Department, a "contraction" in the garment manufacturing industry, along with a decline in tourism, accounted for the decrease in GDP of the Northern Mariana Islands. Since 2002, the commonwealth has been rocked by a number of "economic shocks," including the SARS epidemic and the suspension of flights from Tokyo by Japan Airlines, the release said.
Fluctuations in the tuna canning industry, a large private employer, is what contributed to the numbers for American Samoa, while Guam’s up-and-down spikes reflected changes in construction activity and tourism, according to the release. The SARS epidemic, an outbreak of avian flu and the financial downturn in Asia also affected the territory’s economy.
Meanwhile, GDP in the U.S. Virgin Islands grew at an average annual rate of 2.9 percent, continuing to outpace the other territories and the nation, whose average annual rate of growth was 2.8 percent during the same period.
According to the Bureau of Economic Analysis, the territory’s GDP actually decreased in 2003, but continued to grow at "increasing rates" from 2004-2007.
"The major factors underlying the strong economic growth were the oil refining industry, tourism and territorial government spending," a BEA press release said.
Mills said the next step in the process is to put together the estimates for 2008 and 2009, slightly tougher years for the territory brought on by the global economic recession. Even so, there still should be some growth in 2008, since the economy remained relatively stable until the end of the year, though growth for 2009 might be a little flat, she explained.
"One of the things driving our growth is obviously petroleum — oil," Mills said. "With the strong oil prices, Hovensa was exporting at levels we have never seen. Of course, it’s been hard all around with the changes in the economy, but we are seeing things begin to stabilize and we might even begin to see some marginal growth in some areas. So far, we are seeing an uptick in Hovensa’s numbers again."
The federal government’s move to include the territories has two major implications, Mills added.
"From a policy-making standpoint, we have the numbers to show whether the economy is growing or not, and as we get more and more into the data, we can begin to address some of the key sectors," she said. "Additionally, what’s happening is also historic, in the sense that this is the first time that we have data that’s going to be part of the national database. I mean, this is good news."
According to a news release from Delegate Donna Christensen’s Office, the estimates for 2008 and 2009 — which Mills said would begin to include new indicators, such as a local savings rate — will be released in the spring of 2011, and will be followed by annual estimates.
