Hawaii's rebound slowed by tepid global growth


POSTED: Friday, November 20, 2009

The long-awaited global economic recovery is finally occurring, but the U.S. and Japanese economies so critical to Hawaii have not seen much improvement, which will limit the local rebound.

That was the opinion of University of Hawaii Economic Research Organization economists who released a global economic forecast today.

“;The hoped-for growth is occurring and is now widespread,”; said Byron Gangnes, director of UHERO's Hawaii Economy Group.

“;The only problem for Hawaii is that we are more dependent on the weaker regions.”;

Even with the robust economic pickup in China and other dynamic Asian economies, it will still take the world a few years to emerge from its deep downturn.

“;The anticipated slow pace of global growth will likely mean a subpar recovery for Hawaii, too,”; he said.

A tepid outlook for the U.S. and global economy will limit Hawaii's visitor industry recovery, Gangnes said. And lingering financial sector problems, especially in the United States and Japan, will weigh on Hawaii, he said. The U.S. recession has ended, but it will take time for unemployment to improve and for people to take long trips, Gangnes added.

On a positive note, Japan's GDP has expanded for two quarters, and the country is expected to benefit from rebounding Asian export demand, he said.

Also, the strength of the yen against the dollar could support higher spending by Japanese visitors; however, it might hamper Japan's export business, Gangnes said.

David Uchiyama, vice president of marketing for the Hawaii Tourism Authority, said despite the challenges some Japanese are traveling.

“;During the downturn, many Japan visitors ventured off to Southeast Asia and experienced the resorts,”; Uchiyama said.

“;It might have been cost-efficient but it wasn't the Hawaii experience. Now we are seeing pent-up demand.”;

To capitalize on this trend, HTA pumped $1.2 million into marketing to stimulate travel from Japan, China and Korea, he said.

Struggling Japan Airlines got $400,000 to encourage neighbor island expansion and the addition of seasonal charters, Uchiyama said. Likewise, $448,000 went to support the Shanghai Expo, which could attract more than 70 million people between May and October, he said.

And, Korea's business and incentive travel market got $240,000, Uchiyama said.

Hawaii could see economic growth as a result of East Asia's strengthening economy, Gangnes said. Hawaii's visitor arrivals from China and Korea will grow; however, the base is too low to get the visitor industry back on track, he said.

While emerging markets are of growing importance, Japan remains Hawaii's No. 1 overseas market, and it continues to offer growth opportunities, said Dave Erdman, president and chief executive officer of PacRim Marketing.

“;The stage has been set in Asia by our president and top government leaders to develop more business opportunities,”; he said.