Posted on: Friday, October 17, 2003

Analyst has upbeat outlook for Big Island's economy

By Kevin Dayton
Advertiser Big Island Bureau

HILO, Hawai'i — Economic prospects for the Big Island for the coming year are bright, with a boom underway in construction, and tourism holding steady, according to First Hawaiian Bank economic consultant Leroy Laney.

In First Hawaiian Bank's 29th annual Hawai'i County Economic Outlook Forum yesterday, Laney said the Big Island is adding jobs more rapidly than the state as a whole, with job growth here running at almost 3 percent.

Laney said the growth spurt under way on the Big Island, and particularly in West Hawai'i, is focusing more attention on growing pains.

"The Big Isle's economy is showing strength, something most economists and business people see as a good thing," Laney said. "But anytime the economy in Hawai'i heats up, and not just on the Big Island, concerns also arise about the negative effects of growth — traffic, other congestion, pollution, plus inadequate infrastructure and the ability of government to provide it.

"Some of these worries went away in the 1990s when the economy slumped. But as the economy improves now, they're coming back," he said.

Overall the county jobless rate has declined steadily from 10.2 percent in 1997 to 5.6 percent for the first half of this year, he said.

Although Hawai'i tourism overall suffered from events such as the Sept. 11 terrorist attacks, the Iraq war and the SARS epidemic, the industry on the Big Island was less affected than on O'ahu because the Neighbor Islands are less dependent on Japanese tourists, Laney said.

Tourist arrivals are running a bit below last year's levels, but average length of stay for the visitors increased for both Hilo and Kona, he said.

In presentations in Hilo and Keauhou yesterday, Laney reminded listeners that Hilo hosted 100,000 cruise ship passengers in 1999 and 200,000 last year. That number is expected to jump to 300,000 in 2005, as Norwegian Cruise Lines plans to have three vessels in Hawai'i by the end of next year.

Historically low interest rates have unleashed pent-up demand for housing in Hawai'i, triggering the real estate and construction surge across the state.

The result has been particularly dramatic on the Big Island, where construction permits are running 40 percent ahead of last year's levels, Laney said.

About three-fourths of the permits are for home construction, with multimillion dollar homes in Kona and Kohala fueling the building boom, he said.

Laney is also professor of economics and finance at Hawai'i Pacific University.

Reach Kevin Dayton at kdayton@honoluluadvertiser.com or (808) 935-3916.