Northern Mariana Islands could soon face economic recession

According to Northern Mariana Islands Governor Arnold Palacios (I), the territory may be heading toward a “severe economic crisis.” The turbulence, spurred by a changing economy and divestment from traditional industries in the Northern Mariana Islands, holds “limited prospects for recovery.”

Since Congress passed the Northern Mariana Islands Workforce Act in 2018, the Government Accountability Office (GAO) has drafted biannual reports on the status of the Northern Marianas economy. These reports have revealed that the proportion of foreign workers in the commonwealth is declining and being replaced by US citizens. In the last six years, the share of foreign workers on the island has declined by 10%. 

At the same time, the Northern Mariana Islands has attempted to decrease its reliance on the Chinese tourism market. Governor Palacios, worried that the Chinese market is risky due to increasing tensions between the US and China, has attempted to divert to other East Asian tourist bases. Once a primary driver of the CNMI economy, the Chinese market has diminished.

The confluence of these two factors has put the Northern Marianas in dire economic straits, as Governor Palacios acknowledged in a letter to the GAO in January. Various solutions have been proposed to the problem. Last year, Governor Palacios wrote to the US Indo-Pacific Admiral requesting financial assistance as the Northern Mariana Islands moved to play a larger role in the American military’s forward position. Now, the Northern Marianas port authority Joe Ayuyu has recommended a “marine highway” that would both increase the Northern Marianas military utility and create a new stable market for economic recovery. How the Northern Mariana Islands will emerge from this crisis and what policy will be adopted remains unclear. The GAO recommended collaboration between the commonwealth and the federal Department of Insular Affairs to work through the economic volatility. On February 21, Governor Palacios will also meet with various Department of Interior officials to discuss solutions to the looming recession.