The state forecasts a speedier recovery, thanks to strong visitor numbers
POSTED: 1:30 a.m. HST, Nov 19, 2010
Hawaii's economy is recovering at a faster pace than previously expected, fueled in large part by rapidly rebounding tourismr, according to a state report released yesterday.
After two years of declines, the number of visitors traveling here is forecast to increase 7.7 percent this year to 7.02 million, the Department of Business, Economic Development and Tourism reported. That's up from the previous forecast of 6.81 million visitors DBEDT made just three months ago.
Visitor spending also was revised upward with the department now forecasting an increase of 14.8 percent to $11.47 billion. The previous forecast in August was for an increase of 8.2 percent to $10.81 billion.
"The numbers show that the recovery really is speeding up," said Eugene Tian, acting chief economist for the state. "What's interesting is that while the state economy has been growing better than expected, at the national level growth has been below expectations."
In addition to solid gains in tourism, Hawaii's economy has benefited from federal spending, some of which was the result of President Barack Obama's stimulus plan, he added.
The department is now forecasting state domestic product, the broadest measure of Hawaii's economic performance, to grow by 1.4 percent in 2010 when adjusted for inflation, nearly reversing a 1.5 percent contraction in 2009. The latest growth figure for 2010 was revised upward from a 1.2 percent increase published in August. Gradual improvement is expected to continue through 2012 and 2013, Tian said.
At the national level, meanwhile, the Commerce Department recently revised its estimate for gross domestic product to an inflation-adjusted 2.7 percent in 2010, down from its previous forecast of 2.9 percent.
Although spending by visitors and the federal government continues to grow in Hawaii, the gains have not yet filtered through to the state's construction sector.
Hawaii construction jobs, which peaked at 40,000 workers a month in 2007, continue to hover around 28,500 per month today, according to data from the U.S. Bureau of Labor Statistics.
The broadest measure of construction activity, what industry participants pay in excise tax, is forecast to shrink by 15.9 percent this year, the third consecutive annual contraction, according to a recent forecast from the University of Hawaii Economic Research Organization.
Matson Navigation Co., the No. 1 shipping company serving Hawaii, earlier this month said the positive elements in Hawaii's economy, such as the rebounding tourism sector and rising home prices, have yet to have a significant impact on the company's business.
"While these indications are encouraging, economic recovery has not extended to all sectors of Hawaii's economy and has not yet translated into improved performance for some of our business lines," Matson President and CEO Stanley Kuriyama said in a conference call with investors.
"For example, construction, which is a large driver of Matson's Hawaii container volumes, remains weak," he said.
Greg Barbour, administrator of Foreign Trade Zone 9 at Honolulu Harbor, echoed Kuriyama's concerns.
Barbour said shipping volumes between Asia and Hawaii are continuing to run about one-third less than two years ago.