Renewed Asia crisis willBy Russ Lynch
touch isles, experts say
As most Asian stock markets took a dive today and the yen fell to an eight-year low against the U.S. dollar, local economists said the signs can only be bad for Hawaii.
With yen falling to 146.15 to the dollar and Japan acknowledging it is in a recession, Japanese tourists will be harder to lure to the islands and those who come won't be keen to spend, the economists predict.
Are all the reports of Asia's economic woes exaggerating the situation? No, said two leading local economists.
"If anything, there's been a tendency to underplay the seriousness," said Charles E. Morrison, director of the Asia Pacific Economic Cooperation Study Center at the East-West Center.
There has been the same type of volatility that has characterized Asian markets for some months, he said, "but everyone underestimated the extent to which this currency crisis was going to affect the real economies."
The U.S. economy may not seem to have been affected by the declines in Asian economies but that is changing, particularly as large U.S. corporations are getting hurt there, he said.
"There's two levels of problems here (in Hawaii). One is a kind of fundamental continuing problem that relates to the kind of economy Hawaii has and the difficulty of adjusting the ways we do business."
Second, Morrison said, is the downshift in Asia, adversely affecting tourism to the islands and making it more difficult for Hawaii to climb out of its problems.
"For all that I've said, I'm reasonably optimistic. I think it is a bad crisis. (But) Asia has had bad crises before," he said.
Leroy Laney, chief economist at First Hawaiian Bank, said that as the currency and economic troubles in Asia started to unfold last fall, some impact on the U.S. economy was anticipated.
It didn't seem to happen as much as expected, he said, and people began to discount its importance.
"It's finally having some impact," Laney said. "Obviously, none of these things is good for Hawaii. As long as the Japanese economy remains weak and the U.S. economy remains strong, we're going to see a weak yen. Visitor traffic is going to be weak, and weaker perhaps than we expected."