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State lowers forecast for economic growth


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POSTED: Thursday, May 21, 2009

The state has sharply lowered its forecast for visitor expenditures this year and also revised downward its prediction for the state's growth due to expectations that the national recession will continue to affect Hawaii's economy.

Visitor expenditures are now expected to decline 7.9 percent to $10.4 billion from the February forecast of a 1.9 percent drop, according to data released yesterday by the state Department of Business, Economic Development & Tourism.

The state also now expects a 1.6 percent decline in this year's real, or inflation-adjusted, state gross domestic product. In the previous forecast, the state was looking for a 0.2 percent decrease. In current dollars, the state expects Hawaii's GDP to rise 0.1 percent to $63.5 billion.

In addition, DBEDT lowered its forecast for total wage and salary jobs to a negative 2.1 percent — 612,400 jobs — from minus 1.3 percent.

“;We are hopeful the situation will improve later this year, but recovery is likely to be a gradual process,”; DBEDT Director Ted Liu said. “;We expect that the American Recovery and Reinvestment Act of 2009 will also have a positive impact beginning in the latter half of the year, and will allow the state to make investments in some transformational changes, especially in the area of energy.”;

DBEDT maintained its projection for total visitor arrivals — a 5.9 percent decline to 6.4 million people — but said that it now envisions total visitor days declining 3.4 percent compared with its previous forecast for a 4.4 percent decline.

In other areas for 2009, DBEDT forecasts the state population to edge up 0.8 percent to 1.3 million, and inflation, as measured by the Honolulu consumer price index, to rise just 1.2 percent (half the rate expected in the previous forecast).

Also, the state forecast personal income growth in current dollars to increase 0.1 percent, and, when adjusted for inflation, real personal income to decrease 1.1 percent.

The state expects the economy to stabilize in 2010 with 1.2 percent growth in visitor arrivals, flat real personal income and 0.4 percent growth in inflation-adjusted GDP.

DBEDT also said it sees the net job count remaining flat and inflation remaining low with the Honolulu consumer price index increasing just 1.5 percent.

“;Assuming continued improvement in national and international economic conditions, modest growth in the state's economy is forecast to return by 2011,”; the report said.

DBEDT forecasts visitor arrivals to increase 4.3 percent in 2011 over 2010 and visitor expenditures to rise 7.4 percent during the same period.

In addition, real personal income and real GDP are expected to increase 1.0 percent and 0.9 percent, respectively, in 2011 while the state's job count likely will see a modest 0.5 percent increase for 2011.

“;That gradual pace of recovery should continue in 2012, barring unforeseen events,”; the report said.

 

IN SEARCH OF A RECOVERY

The state Department of Business, Economic Development & Tourism's latest 2009 forecast for Hawaii, with projected change versus 2008.

                                                                                                                                                                                                                                                                                                                                                                                                               
ECONOMIC INDICATORS2009 % CHANGE
Total population1.3M+0.8%
Visitor arrivals6.4M-5.9%
Visitor days61.7M-3.4%
Visitor expenditures$10.4B-7.9%
Honolulu CPI231.7+1.2%
Personal income$52.2B+0.1%
Real personal income*$39.7B-1.1%
Total wage & salary jobs612,400-2.1%
Gross domestic product$63.5B+0.1%
Real gross domestic product*$49.2B-1.6%



* Base year is 2000

Source: State Department of Business, Economic Development & Tourism