It's another wake-up call for the island. COVID-19's devastating impact on Guam's economy echoes the need to reduce reliance on tourism, according to the 2020 Economic Report released by a team out of the University of Guam School of Business and Public Administration.

According to the report, Guam's economy showed a retraction between -07% and -18.9% last year. The estimate foreshadows the island's 2020 Gross Domestic Product figure which could take another year for release by the Department of Commerce. And our figures could have been much worse without federal pandemic assistance. We could have seen a retraction as much as -49%. The more than $1.6 billion in federal funding helped offset the loss funds Guam visitors would have infused into the economy - about $1.38 billion, according to the report.

That finding highlights the advantages of the island's relationship to the U.S. noted in the report.

“The COVID-19 pandemic of 2020 is not just a health crisis. It is an economic crisis and a crisis in self-identity,” UOG Economics Professor Maria Claret Ruane said. “Although the relationship with the U.S. may have limited the island in its response efforts toward COVID-19, Guam received funding and aid from the federal government, which mitigated the economic impact. All factors must be considered when discussing self-determination.”

The report states that “an independent Guam characterized by a weak tourism industry and a lack of new local industries to diversify our current economic structure would [have forced] us to learn to live with much less material security and opportunities than our current relationship with the U.S. affords us, even more so during this pandemic.”

According to the report, decline in Guam’s economy compared to 2019 is based on the following factors:

The authors estimate that Guam’s 76% decrease in tourism from 2019, as reported by the Guam Visitors Bureau, resulted in a loss of local income and spending of $1.38 billion.
The $1.38 billion loss from tourism was more than offset by the $1.6 billion Guam received in various forms of federal assistance through the CARES Act. In the absence of this assistance, the report estimates Guam’s economy would have declined 42% to 49%. For reference, the U.S. economy decreased 25% between 1929 and 1933 during the Great Depression.
The authors calculated the unemployment rate to be 19.8% using one approach and 26.6% using another. This supplements an official unemployment rate released by Guam’s Bureau of Labor Statistics for June 2020 of 17.3%.
The authors calculated that household spending decreased between 30% and 50%, while business spending decreased 50% to 70% in the absence of federal assistance.