A new report by University of Hawaii economists predicts the coronavirus scare will cause real visitor spending in Hawaii to fall by more than 10% and reduce the number of payroll jobs in the state by more than one-half of 1%, but acknowledges there are a “wide range of other possible outcomes.”
Earlier this year the University of Hawaii Economic Research Organization or UHERO suggested it was at least plausible Hawaii’s economy would shake off the economic impact from coronavirus as it did when severe acute respiratory syndrome, or SARS, threatened the travel industry in 2002.
However, “in the past two weeks, things have changed markedly,” according to the new report.
“While new infections have slowed markedly in China, the spread of the novel coronavirus in South Korea, Iran, Italy, Japan, and now more than two-thirds of U.S. states, suggests a more prolonged outbreak is in the cards,” according to the report. “And the longer the virus spreads, the greater the human and economic toll.”
By the first week of March, Hawaii’s international passenger counts had declined by 32% from last year’s level, and while domestic arrivals are off only slightly from last year, “we expect that to change quickly as the coronavirus spreads on the U.S. mainland,” according to the new UHERO report posted online today.
“Based on these recent developments, we have now substantially marked-down our baseline forecast for Hawaii’s visitor industry and broader economy,” the report states. “The rolling nature of disease outbreaks — and the potential for significant knock-on macroeconomic effects — will likely result in a downturn that is much more severe than we saw with SARS.”
The report predicts visitor arrivals will fall sharply by 13% in the second quarter of this year, and be off by more than 7% for the year as a whole. The recovery will begin by this summer, but will not be complete until a year later, according to UHERO.
The report also projects some grim employment numbers, with nearly 6,000 jobs lost by the third quarter of this year, and “a very restrained pace of hiring for the next several years.”
“Among the counties, Honolulu is most adversely affected, because of its heavier reliance on international markets, but all islands see a substantial decline in visitor numbers this year and a protracted recovery period, as well as aggregate job losses,” according to the report.
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