UH adds weight to recovery forecasts

By John Duchemin
Advertiser Staff Writer

Despite uncertainties revolving around the prospect of terrorism and possible war with Iraq, Hawai'i economists continue to predict gradual economic recovery in the state heading into 2003.

Two University of Hawai'i economists joined the general consensus with a report released today predicting moderate growth in visitor arrivals, jobs and income next year.

Visitor arrivals should climb about 4.6 percent next year, while the job count will inch up 0.7 percent, both recovering from declines in 2002, said Carl Bonham and Byron Gangnes, economics professors and members of the University of Hawai'i Economics Research Organization.

Gangnes and Bonham also predicted 4.3 percent unemployment, 1.8 percent inflation and 2.3 percent personal income growth, all comparable with this year's levels.

"Hawai'i's economy is on the road to recovery," the economists said.

The UH forecast echoes similar predictions by First Hawaiian Bank economic consultant Leroy Laney, who last month said the economy would grow at a moderate pace in 2003. Bank of Hawai'i and the state Department of Business, Economic Development and Tourism have issued similar forecasts.

The forecasts reflect the state's rebound from the fall-off of 2001. Tourism activity levels have been down for most of the year, but are still much higher than last fall's post-Sept. 11 levels. Meanwhile, a strong housing market and construction industry, both buoyed by lower interest rates, and an increase in domestic tourism arrivals have helped the economy.

But like Laney, Bonham and Gangnes said the Hawai'i economy faces uncertainty that is dampening recovery of tourism and holding back job and income growth.

They note that Japanese and U.S. East Coast tourism has not recovered, and payroll jobs in most tourism-related sectors are still well down from the previous year's levels.