The state revised its economic projections for the next two years, saying growth would be slower than previously expected due in part to the departure of two airlines and two cruise ships from Hawai‘i’s market.
The latest report from the state Department of Business, Economic Development & Tourism expects moderate growth for most of the state’s economic indicators, including personal income, total wage and salary jobs and gross domestic product.
Visitor arrivals, the sole area of contraction, are expected to decrease 3 percent in 2008, up from 1.6 percent from the previous forecast. No growth is expected in 2009; however, some recovery is expected the following year.
The report anticipates a turnaround in the trend for 2010 and 2011, with 1.4 percent and 1.7 percent growth, respectively.
“We believe that our economy will adjust to recent economic events and that our fundamental economic foundation remains strong,” DBEDT Director Theodore E. Liu said Monday.
The Honolulu Consumer Price Index, a proxy for inflation, is expected to rise 4.2 percent this year, and 3.3 percent in 2009.
In response to considerable moderation in both job and employment growth in the latest quarter, wage and salary job growth has been lowered to 0.4 percent from 1.4 percent. The job growth forecast for 2009 is also decreased to 0.8 percent from 1.3 percent.
Real GDP is projected to grow 2.3 percent in 2008 and 2.2 percent in 2009 down 0.2 and 0.3 of a percentage point, respectively, from the previous forecast.
Job growth to slow
UHERO’s County Forecast report, also issued this week, says zero growth is projected for all four counties, continuing the trend of recent years.
The adverse airline and cruise industry developments, a weak external environment for tourism, and the turning of the statewide construction cycle are expected to influence the slow-down for the next two years.
“Our expectation is that it will be several years before the islands return to a moderate pace of economic expansion,” the report states.
On Kaua‘i, which has had the strongest visitor industry performance over the past two years, arrivals are expected to decline by nearly 11 percent this year and to remain flat in 2009. Like the state projections, a modest rebound in this area is estimated to begin in 2010.
A 3.3 percent drop in visitor days for Kaua‘i is expected in 2008, with less than 1 percent recovery in 2009.
Meanwhile, moderate job growth has continued on Kaua‘i longer than in the other counties, and the number of payroll jobs set a new record at 31,020 on a seasonally adjusted basis in the first quarter of this year. Nevertheless, job growth is expected to slow on Kaua‘i to 0.7 percent this year, before falling back by 0.2 percent in 2009.
As construction expansion on Kaua‘i continues, DBEDT expects jobs to peak this year and to contract at a moderate pace for several years thereafter.
After an estimated 1.2 percent growth last year, aggregate real income will be flat in 2009, before returning to moderately strong expansion in 2010.