Roseann Jones, a professor of economics with the University of Guam, called the COVID-19 pandemic “transformative” in the way it has impacted the island’s economy.
She said past downturns in the island economy during the Asian economic crises in the 1990s, the SARS outbreak and 9/11 did not have such a broad or sustained impact as the current crisis.
By March 31, the end of the budget year's first quarter, Guam’s economy had begun to lose its footing.
“At that time we were seeing signs of an economic downturn, but a slight one,” Jones said.
“So technically while we are forecasting a recession or perhaps something more dramatic than that, we need to see the data for consecutive quarters of negative downturns of economic activity,” she said. “Technically, we are not there yet because we cannot document that ... but the likely outlook is we will go into a recession.”
A recession is characterized as two quarters of economic downturn.
If Guam will see something more dramatic, it means going through a sustained recession over several quarters when the economy is unable to find a stabilizing factor to begin to build again, she said.
An economic depression, she said, has been discussed as a possibility.
“The depression word is being circulated,” said Jones, “(When) you are continuing to see high levels of unemployment, you are continuing to see deflation, prices going down in the market, you are seeing that happening all across the board and that is happening quarter after quarter. It begins to feel like there is no turnaround for the economy,” she said.
The island has an estimated 38,000 private sector workers who have been furloughed or laid off. A few businesses have faced the inevitability that they're not going to be able to recover from the COVID-19-related shutdown.
The local tourism industry is at a standstill.
But Guam hasn't reached a point of no return just yet, according to Jones.
“We are not there yet. We have ... a brighter outlook,” Jones said.
Gov. Lou Leon Guerrero has predicted Guam's economic recovery will take one or two years.
“It depends on how you define a recovery,” said Jones. "I think she is probably right about that. It is probably going to be one to two years – maybe longer. It all depends. That outlook is going to shift as we get more information.”
Jones said any recovery will come in stages and be dependent on how the health emergency evolves on Guam.
“If there is going to be a second wave (of COVID-19) or a third wave, then that target is going to go beyond that one- to two-year outlook. It’s a moving target,” she said.
But no matter how long it takes for the local economy to recover, the possibility of life returning to the way it was – before COVID-19 – may not be in the near future for Guam.
“A return to the ways we had prior to the pandemic – a way to fully return to that is yet to be seen,” Jones said.