UH study shows global economy slowing
Hawaii's main economic driver is already feeling the effects of the slowing global and U.S. economy, which is expected to worsen in 2008, according to a new report by the University of Hawaii Economic Research Organization.
The slowing of the global economy this year, which peaked at nearly 4 percent growth in real gross world product last year, is the result of contraction in the U.S. residential market following the collapse of the subprime mortgage sector, the report said.
In turn, this has weakened Hawaii visitor arrivals over the last year, said UH economist Byron Gangnes, who wrote the report.
"So looking forward that means ... the visitor industry environment in Hawaii is going to be restrained to some extent by this lingering weakness in the U.S.," he said. "These days the American market matters most. Japanese visitors have been down so far that really we're dependent on the U.S. market."
This year's real gross world product, which measures global economic activity, is expected to be 3.7 percent higher year over year, while global growth is projected to slow to 3.5 percent in 2008, the report said, adding that the risk of a U.S. recession is at its highest in recent years.
The U.S. real gross domestic product is expected to grow by 2.1 percent, down from 2.9 percent last year, with average growth of 2.2 percent in 2008.
Meanwhile, Japan has joined the global slowdown, with a projected gross domestic product increase just under 2 percent this year, down from 2.2 percent last year. Only 1.7 percent growth is expected in 2008.
UHERO predicts that European gross domestic product growth will average about 2.6 percent this year, with weaker growth next year.
For developing Asian countries, China is leading at 11.4 percent growth this year, while India's annual growth is estimated at 8.5 percent. However, both countries are highly dependent on exports and would be adversely affected if the U.S. falls into recession, UHERO notes.