War sours
state outlook

The threat of an Iraq conflict prompts
the state to lower its economic
projections for the year

By Russ Lynch

The state government has lowered its projections for 2003 in a number of important economic areas, saying the threat of a new Middle East war has already hurt Hawaii's economy.

While some of its numbers are still positive for this year, the state Department of Business, Economic Development & Tourism said the projections have declined.

Also, the latest numbers do not include the possible effects of the country actually going to war, DBEDT said.

The state government sees real personal income -- income after accounting for inflation -- rising 1.7 percent this year. That is lower than the 2.5 percent it projected three months ago. And DBEDT lowered its visitor arrivals projection to an increase of 5.3 percent in 2003, from the 6.1 percent it predicted in December.

The state also lowered its job growth projection to 1.4 percent from 1.6 percent projected in December. But even the reduced job-count projection would be an improvement over the 0.5 percent decline in jobs in 2002.

"Inflation is likely to be slightly higher in 2003, with an expected 1.7 percent increase in the Honolulu Consumer Price Index. This will be up from a 1.1 percent increase in 2002," DBEDT said in its quarterly review and forecast, which is available on the Web at

The reduced expectations are in line with those of the Council on Revenues, an independent group of economists that estimates state revenue, which last week dropped its overall 6.1 percent growth rate projected for 2003 to 4.3 percent.

And Leroy Laney, an economics professor at Hawaii Pacific University, said he generally agrees with the dip.

A forecast he made in November was for visitor arrivals in 2003 to rise 5 percent over 2002 and the job count to rise 1.5 percent, Laney said.

"If I was to revisit this I would shave it off some. If we do have a war with Iraq that would affect us negatively, risking a double recession," Laney said. He said that would mean returning to a recession in place in 2001.

The Hawaii economy is already being hurt by the threat of war, DBEDT said. "We are seeing some reduction in expected visitor activity related to the heightened potential for war," said Ted Liu, DBEDT director.

Laney agreed. "Essentially we are already at war," he said.

Hawaii State Department of
Business, Economic Development & Tourism

E-mail to Business Editor


Text Site Directory:
[News] [Business] [Features] [Sports] [Editorial] [Do It Electric!]
[Classified Ads] [Search] [Subscribe] [Info] [Letter to Editor]
© 2003 Honolulu Star-Bulletin --