In the midst of the nation's financial crisis, the state has lowered its economic projections, particularly for visitor arrivals that are expected to plunge 10.1 percent for the year.

Hawaii's visitor count, previously forecast to fall 6.7 percent this year, isn't expected to recover until 2010, according to the latest report released yesterday by the state Department of Business, Economic Development & Tourism.

Despite the lower growth forecast, the state so far has been able to dodge a recession, said Pearl Imada Iboshi, the state's chief economist.

“;The U.S. is definitely in recession and Hawaii pretty much has no growth, but I'm not ready to call it a recession yet,”; she said.

However, the impact of the financial meltdown is being felt in the slowing construction and tourism sectors, according to DBEDT Director Ted Liu.

DBEDT expects the state's real gross domestic product to inch slightly upward by 0.3 percent in 2008 and to be flat in 2009.

Real personal income is forecast to fall moderately in both 2008 and 2009, at 0.2 percent and 0.4 percent, respectively.

Meanwhile, the job growth forecast has been lowered to no growth in 2008 and negative 0.2 percent in 2009. Visitor arrivals are projected to fall 1.9 percent in 2009, before increasing 1.4 percent and 1.7 percent in 2010 and 2011, respectively.

The bright spots in the forecast are continued federal spending, including military privatization, as well as an aggressive effort to accelerate state capital improvement projects.

DBEDT predicts that inflation will fall substantially over the next few years as housing costs and oil prices stabilize and anticipates a 4.2 percent increase in the Honolulu Consumer Price Index—a proxy for inflation—in 2008 and 2.6 percent rise in 2009.

“;Right now we're comparing (projections) to a very good year—2007 was a very good year,”; Iboshi said. “;Next year we're only expecting the first three months of year to be bad ... after that we're expecting it to be relatively stable.”;