HONOLULU — In its latest quarterly economic report, the Department of Business, Economic Development & Tourism (DBEDT) says it expects the national recession to slow Hawai‘i’s economy in 2009 more than previously forecast.
Based largely on downward revisions in national economic forecasts, the Department now expects a 0.2 percent decline the state’s 2009 gross state domestic product as well as a 1.3 percent decline in the average job count for the year.
Tourism will likely be impacted more than previously expected also, with visitor arrivals declining 5.9 percent for the year. Still, the current national consensus forecast continues to expect a modest recovery to begin in the second half of this year.
This suggests the prospect for some signs of economic stability, if not improvement for Hawai‘i by late 2009 or in the first half of 2010.
“National and international economic conditions continue to slow Hawai‘i’s economy and this will likely be the case for most of 2009,” said DBEDT Director Theodore E. Liu. “We are hopeful of a turnaround beginning late this year, but recovery is likely to be a gradual process. 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.”
Recent forecasts for the U.S. economy show sharper declines in the first half of the year and slower growth in the second half than previously projected. Forecasts of key international economies have also been lowered.
As a result, DBEDT now expects total visitor arrivals to decline 5.9 percent in 2009, down from a 1.9 percent decline projected in the previous (November 2008) forecast.
In light of 2008 fourth quarter declines in jobs and the lower forecast for visitor arrivals, the state now expects total wage and salary jobs to decline 1.3 percent in 2009. This is down from a 0.2 percent decline projected in the previous forecast.
The Honolulu Consumer Price Index (CPI), a proxy for inflation, is expected to rise just 1.2 percent in 2009, about half the rate expected in the previous forecast.
The expectation for personal income growth in current dollars has been lowered to 0.8 percent for 2009, but lower inflation will limit the decline in real personal income to the previously forecasted, -0.4 percent.
The state’s gross domestic product (GDP) in current dollars is forecast to increase 1.5 percent for 2009. However, as with personal income, the lower inflation rate will result in just a slight decline in GDP (-0.2 percent), very near the previous forecast.
The state’s economy is expected stabilize in 2010 with a modest, 1.3 percent growth in visitor arrivals and slight increases in real personal income (0.6 percent) and real GDP (1.1 percent). The net job count, however, is likely to remain flat in 2010. Inflation will remain low with the Honolulu CPI 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 visitor arrival count is forecast to increase by 4.6 percent in 2011, with visitor expenditures up 7.2 percent. Real personal income is expected to increase 1.0 percent, and real GDP by 1.6 percent in 2011. The state’s job count will likely see a modest 0.5 percent increase for 2011. That gradual pace of recovery should continue in 2012, barring unforeseen events.
The DBEDT Quarterly Statistical and Economic Report contains more than 100 tables of the most recent quarterly data on Hawaii's economy as well as narrative explanations of the trends in these data. The full report is available at:
http://www.hawaii.gov/dbedt/info/economic/data_reports/qser.
