Slow isle growth
forecast

By Rob Perez
Star-Bulletin

Hurt by continued declines in tourism and construction, Hawaii's economy will grow only slightly next year, matching a lackluster 1997, a local economist said today.

Speaking at First Hawaiian Bank's 29th annual Oahu Business Outlook Forum, Hawaii Pacific University economics professor Leroy Laney predicted only 1.5 percent growth in the gross state product, a broad gauge of Hawaii's economic health.

Such growth would be identical to what Laney expects the economy to eke out this year.

"I'm not predicting any kind of resurgence based on what I see now," he said in an interview.

Laney is forecasting a 2 percent drop in tourism. That's in stark contrast to the Hawaii Visitors & Convention Bureau's prediction yesterday of a 1.9 percent increase next year, based on a major new marketing push.

Given the poor Japan economy and a slowing U.S. economy, Laney said he considers the bureau's forecast "a little implausible."

He also said a 1 percent drop in construction, on the heels of a 5 percent drop this year, will be another drag on the economy.

Tempering the declines, Laney projects that consumer prices will fall 0.5 percent next year, following a flat inflation picture this year.

He also expects personal income, which should end 1997 up 2 percent, to grow another 1.5 percent next year.

Laney said low interest rates have boosted Hawaii's housing market and fueled mortgage refinancings, which have put more money in people's pockets.

And while official tallies show Hawaii still losing jobs, the employment count is biased toward large employers, which tends to mask jobs being created by small businesses, Laney said.

One sign of such job growth: individual filings on estimated state taxes has increased strongly the last two years and was up almost 15 percent the first half of 1998, he said.