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Banker: Guam economy 'shattered'

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HAGÅTÑA (The Guam Daily Post) — Guam's economy could get worse in 2021 before it gets better in 2022, according to University of Guam economics professor Roseanne Jones and BankPacific President Phil Flores.

Jones anticipates recovery to begin in 2022, while Flores believes it could be in 2023.

Economic recovery depends mainly on whether federal relief funding will still be available in 2021 to help Guam while waiting for the widespread distribution of effective Covid-19 vaccines by the end of this year or mid-2021, Jones said.

If the vaccines are rolled out late this year or by spring to summer 2021, the priorities could be health care workers and the vulnerable population before the general public, she said.

It would take another six months after widespread vaccination before Guam's economy begins to build back up again, Jones said — and that's two years from now.

"We'll see some steps along the way getting us there. But full-on, back to what we once had, the projection is 2022," Jones said.

This doesn't mean Guam will be in lockdown until then, she said.

A pedal boat is parked on the beach on Sept. 10, 2020 in Tumon Bay, Guam. Photo by David Castro/The Guam Daily Post

But the level of uncertainty will continue to be high, unless federal aid continues at least until massive and effective vaccination reaches Guam.

The reopening of Guam's tourism will also depend heavily on its major visitor markets such as Japan and Korea also having access to effective and widespread vaccination.

A big chunk of the $1.63 billion in authorized federal pandemic relief funding for Guam has been released in fiscal year 2020, which Jones and Flores said has been keeping the island economy afloat.

"Without the federal aid, the longest lines wouldn't be at the post office. They would be at the bankruptcy court," Flores said. "So much for those who want independence."

The state of the Guam economy, he said, is "shattered."

'It will be worse'

Flores, a longtime business community leader, said he does not see any reason to think fiscal 2021, which begins Thursday, will be an improvement over fiscal 2020.

"It will be worse," he said. "With the shuttered hotels and other businesses, many of which have been forced into failure, I'd rather look at 2023 before things come back to normal."

Flores said if the federal government does not keep on doling out money, "what would happen then would make today seem like boom times."

"And keep in mind, I have a totally optimistic approach to life," he said, adding that this includes being realistic.

Additional relief

There's a push in Washington, D.C., to release a second stimulus package that could be bigger than the $2.2 trillion Coronavirus Aid, Relief and Economic Security, or CARES, Act.

"Without that, 2021 looks really difficult," Jones said.

The full-on impact of the Covid-19 pandemic and the displacement of some 30,000 jobs, she said, would be felt in 2021 unless federal funds continue to flow.

The Pandemic Unemployment Assistance program covers unemployment benefits through December. Guam has been authorized a budget of $924 million, of which more than half has been released and distributed.

Tourism has been at a standstill, but some hotels have managed to keep their doors open with limited occupancy from mostly military personnel and government quarantine facilities.

The Nov. 3 presidential election could also impact the release of another massive relief package, Jones said.

Gov. Lou Leon Guerrero is looking to additional federal funding for fiscal 2021, she told a congressional committee hearing recently.

Federal funds helped every aspect of the Guam economy by giving out economic impact checks to households, unemployment benefits, small businesses forgivable loans and kept GovGuam operational — from the hospital to schools and utilities agencies.

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