State’s economic outlook remains upbeat for 2003

Even during wartime, the head of the state Department of Business, Economic Development & Tourism sees a visitor industry rapidly rebounding, and Japanese and U.S. economies showing signs of growth.

“We think that we’re seeing some reduction in expected visitor activity related to the heightened potential for war,” said Theodore E. “Ted” Liu, DBEDT director.

“However, in the longer run, Hawai’i should rebound as the Mainland and Japan economies gain strength,” he said.

His comments came as his department released its March, 2003 Quarterly Statistical and Economic Report, which contains positive projections for economic indicators as well as current economic summaries for the state and counties.

Hawai’i’s real personal income is expected to grow 1.7 percent this year, according to preparers of the updated economic outlook from the DBEDT Research and Economic Analysis Division.

The report notes that the forecast attempts to recognize changed national and international security conditions, but did not assume the United States would be at war.

The March projection for growth in visitor arrivals in 2003 is 5.3 percent, down from the 6.1 percent growth projection in December. This reduction in the forecast is related to the lower-than-expected passenger arrival figures observed for February and March.

However, positive growth is still expected, to some degree as a catch-up from the 0.9 percent rate of growth recorded in 2002. Growth is expected particularly from the Japan market.

The forecast expects the statewide job count to show a 1.4 percent increase in 2003. This would follow an estimated 0.5 percent loss of jobs for 2002. Job losses in 2002 were concentrated in retailing, transportation and hotels, the three sectors most sensitive to visitor activity.

Inflation is likely to be slightly higher in 2003, with an expected 1.7 percent increase in the Honolulu consumer price index. This will be up from a 1.1 percent increase in 2002.

Beyond 2003, the outlook sees the economy returning to a moderate growth path, assuming reasonable performance in the U.S. and international economies.

DBEDT economists look for growth in the visitor count to be 4.2 percent in 2004 as Hawai’i continues its post-September-2001 recovery, leveling off in the 2-percent to 2.1-percent range for 2005 and 2006.

Job growth may remain modest, at around 1.2 percent to 1.3 percent for 2004 and 2005, respectively. Real personal income is expected to grow about 1.9 percent to 2 percent per-year over the period.

The report may be found on the DBEDT Web site: http://www.hawaii.gov/dbedt/qser/.

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