CNMI Guide

Trade, Industry and Finance in the Northern Mariana Islands

The annual Gross Domestic Product (GDP) of the CNMI is around $733M, making the economy one of the smallest in the world.  However, GDP per capita shows a healthier $13,600 which would place the Islands at 97th out of a total of 206 sovereign states worldwide. 

Given its idyllic Pacific island location, it would perhaps come as little surprise that, historically, tourism has been hugely important to the Northern Mariana Islands.  Visitors from Japan formed a significant proportion of tourists to the islands and it therefore came as a considerable blow to the industry when Japan’s national airline, JAL, ended its regular service in 2005; a setback from which the tourist industry has not yet fully recovered.  On the plus side, Chinese carrier China Eastern Airlines has begun a four times weekly service to Saipan prompting hopes of a growth in Chinese tourists to the Islands.  At the last count, Japan accounted for around half of visitors, with South Korea around a third, of the total of around 400,000 tourists annually, an industry worth around $183M per annum. However, recent estimates have suggested that the proportion of Japanese and Korean visitors may be closer to parity for the 2013 season.  While Saipan is the most populous island of the Northern Mariana group, the islands of Tinian and, particularly, Rota are widely seen as the prime tourist destinations.  The Lonely Planet Guide, for example, describes Rota as “the diamond tiara of the Marianas”.

As noted earlier in the CNMI Guide, the Island’s textile industry has also seen something of a decline in recent years.  For some time, it owed a considerable comparative advantage to its cheap labour costs coupled with its status inside the “tariff wall” as a Commonwealth territory of the USA.  Both these advantages have been undermined in recent years with the gradual harmonisation of minimum wage legislation with the rest of the USA and, particularly, the influx to mainland USA of cheaper clothing imports from Asia Pacific, principally due to relaxations in US import tariffs and controls.  Nonetheless, textiles and handicrafts still form the overwhelming proportion of the Northern Mariana Islands’ $98.2M export sector.

Agriculture and fishing are also important indigenous industries including livestock, ornamental tropical plants and a thriving fishing and aquaculture sector with banking and local construction projects other significant components of the region’s economic activity.

Given recent setbacks with its main sources of income from trade and industry, it is perhaps not surprising that the CNMI shows a considerable trade deficit, presently at somewhere around -$116M with an overall budget deficit of some 8% of total GDP.  Inevitably, this has led to a requirement for a considerable inward state subsidy from US Federal Government.