Northern Mariana Islands Economy Rebounds With Strong Growth in 2021 and 2022

Overview of Recent GDP Performance

The Commonwealth of the Northern Mariana Islands experienced a significant economic recovery in the years immediately following the sharp contraction induced by the COVID-19 pandemic. Real gross domestic product increased 5.1 percent in 2021 and accelerated to a 16.7 percent gain in 2022. These advances came after a 29.1 percent decline in 2020, according to data released by the U.S. Bureau of Economic Analysis.

The pattern illustrates both the severity of the initial shock to the territory's economy and the uneven pace of its subsequent rebound. While the 2021 expansion was relatively restrained, the 2022 performance reflected a more robust return of external demand, particularly in services. These figures represent preliminary estimates for 2022, as certain key data sources remain unavailable.

Drivers of the 2022 Expansion

Growth in real GDP from 2021 to 2022 was propelled by substantial increases in exports, government spending, and private fixed investment. Exports rose dramatically by 324.9 percent, overwhelmingly due to a resurgence in visitor spending, which forms the core of service exports for the territory. This surge coincided with a 656.4 percent increase in visitor arrivals, as reported by the Commonwealth government.

Government spending advanced 4.7 percent, with both territorial and federal components contributing. Territorial outlays grew 3.3 percent, supported by federal grants including payments from the Coronavirus State and Local Fiscal Recovery Funds and Education Stabilization Fund, authorized under legislation from 2020 and 2021. Federal spending increased at a faster 22.8 percent pace, largely reflecting construction activity associated with the U.S. Air Force's Tinian Divert Airfield project. Private fixed investment also rose 3.8 percent, driven mainly by business purchases of equipment.

These positive contributions were partially offset by a 3.3 percent decline in personal consumption expenditures. The contraction in real terms occurred even as nominal spending increased, because consumer prices rose at a faster rate. Imports, which are subtracted in the GDP calculation, also increased and therefore dampened overall growth.

Factors Behind the 2021 Recovery

The more modest 5.1 percent real GDP increase in 2021 was supported primarily by higher government spending and personal consumption expenditures. Government outlays rose 19.2 percent, with territorial spending up 19.9 percent and federal spending increasing 11.2 percent. The territorial gains were aided by federal grants such as Coronavirus Relief Fund payments and Education Stabilization Fund resources authorized under pandemic-related legislation. Federal spending in this period was boosted by reconstruction efforts following Typhoon Yutu.

Personal consumption expenditures grew 11.1 percent, helped by government assistance payments distributed to households under the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act. These fiscal supports appear to have provided a buffer for household spending even as the broader economy continued to face challenges.

Offsetting these gains were declines in exports and private fixed investment. Exports fell 58.1 percent, again reflecting weakness in visitor-related services; visitor arrivals dropped 85.7 percent in 2021 according to Commonwealth statistics. Private fixed investment decreased 6.4 percent, with reduced business outlays on both structures and equipment. Imports rose, providing a further drag on the GDP total.

Industry and Compensation Trends

Newly available data on GDP by industry for 2021 show that the government sector was the dominant contributor to that year's 5.1 percent overall increase. The government sector expanded 13.2 percent, driven largely by growth in compensation of territorial government employees. The private sector recorded a smaller 0.6 percent advance, with gains in professional services and construction partly offset by weakness in accommodations, food services, and amusement activities, consistent with the steep drop in visitor arrivals.

Total compensation across the economy rose from $578 million in 2020 to $604 million in 2021. Nearly all of the $26 million increase stemmed from higher territorial government compensation. In contrast, 2020 had seen a broad-based contraction. Real GDP fell 29.1 percent that year, with the private sector declining 40.6 percent as businesses operated under severe pandemic-related constraints. Visitor arrivals plunged 81.7 percent, and casino gambling revenue fell more than 95 percent.

The government sector provided a partial counterweight in 2020, expanding 9.7 percent mainly because operating losses at government utilities returned to more normal levels after elevated spending in the wake of Typhoon Yutu. Total compensation dropped sharply from $701 million in 2019 to $578 million in 2020, reflecting widespread reductions in private-sector pay across accommodations, food services, other industries, and wholesale and retail trade.

Data Revisions, Methodology, and Outlook for Statistics

The estimates for 2018 through 2020 incorporate revisions based on updated source data, including fiscal year 2021 financial statements for the Commonwealth government and its agencies, import tabulations from CNMI Customs, business revenue data from the CNMI Department of Finance, and federal contract obligation information. Despite these revisions, the overall pattern of inflation-adjusted GDP growth remains broadly similar to previously published figures.

The 2022 statistics are preliminary, reflecting lags in the availability of certain data. In particular, territorial government spending estimates rely on limited information because audited financial statements for fiscal years 2022 and 2023 were not yet available as of November 2024. The Bureau of Economic Analysis employed alternative estimation approaches, such as extrapolating payroll and holding certain other components constant in real terms from 2021.

Looking ahead, production of these GDP statistics for the Northern Mariana Islands has been paused. The annual release has been funded by the Office of Insular Affairs within the U.S. Department of the Interior. That office is conducting an assessment of territorial source data to determine future investment priorities. The Bureau plans to resume the series once funding and improved data sources are secured. Historical statistics remain available on the agency's website.

Source

U.S. Bureau of Economic Analysis published this record on 2024-11-21. Pennington Financial accessed it on 2026-10-27.