State cuts forecast
for 2003 tourismHawaii's economy nevertheless
contains many bright spots
The state is expecting far fewer visitors this year than initially forecast -- but is still predicting overall economic growth for Hawaii in 2003.
In its latest quarterly economic report, released yesterday, the state Department of Business Economic Development & Tourism predicted the total visitor count for 2003 would increase by 0.5 percent. Three months ago it estimated visitor arrivals would be up 5.3 percent.
Visitor spending was also revised downward, to 3.1 percent growth for the year vs. the 6.8 percent predicted in March.
The effect of the war with Iraq and severe acute respiratory syndrome on Japanese travel was the main reason expectations were lowered, according to the report.
The University of Hawaii Economic Research Organization had predicted earlier that Japanese visitor arrivals this year would fall by 8.6 percent from last year, bringing overall Hawaii arrivals down 1.3 percent. That would mean a total of 1.35 million Japanese visitors to Hawaii in 2003, down from 1.48 million arrivals last year and down 25 percent from 1.82 million in 2000. The UH research organization also blamed the weak Japanese economy and a decrease in Hawaii flights.
Besides the international visitor count, other lagging areas of the economy over the past several months have been individual and corporate income tax collections, and job creation in manufacturing and agriculture.
But the latest report does not contain all bad news for Hawaii's economic prospects.
The major bright spot in DBEDT's latest forecast was construction.
The number of private building permits for the first quarter of 2003 increased by almost 95 percent compared with the first quarter of 2002.
That increase, also fueled by record-low mortgage rates, is no surprise to those in the construction industry, particularly in the area of new home construction.
Speaking about new home sales earlier this year, Mary Flood, vice president of sales and marketing for Schuler Homes Hawaii, said developers are scrambling to keep up with demand.
"Our sales are far outpacing our ability to deliver," she said.
In the first quarter of this year, new home sales contracts on Oahu were up nearly 38 percent from the previous year.
DBEDT also noted that strong job growth from late 2002 into early 2003 would likely result in a gain of more than 10,000 jobs for the year.
DBEDT had originally forecast a growth in jobs of 1.4 percent over the previous year, when there were no jobs gained. The revised forecast now predicts job growth of 1.9 percent over 2002. Next year, job creation is expected to slow to a 1.3 percent increase.
And DBEDT revised its forecast for personal income. Instead of a growth projection of 1.7 percent forecast for the year in March, personal income is predicted to grow by 2.1 percent.
The state's economic output for 2003, or gross state product, also appears stronger than was originally forecast. Instead of a predicted growth of 3.8 percent, DBEDT now forecasts growth of 4.1 percent.
Crystal ball
The state Department of Business, Economic Development & Tourism is predicting 1.9 percent growth in jobs for the year and a 4.1 percent jump in gross state product. These are some of the first-quarter indicators it used to come to those conclusions:
Indicator % change from 2002 Bankruptcy filings Down 23% Building permits Up 95% General excise tax collections Up 15% Job count Up 2.7%
Department of Business, Economic Development & Tourism
