Posted on: Friday, March 25, 2005
UH economists see sustained strength in '05
By Sean Hao
Advertiser Staff Writer
Hawai'i's economy should remain strong this year, though the pace of growth is expected to slow next year as visitor arrivals begin to peak, according to a group of University of Hawai'i economists.
Gregory Yamamoto • The Honolulu Advertiser Tourism remains the largest component of gross state product, despite efforts to diversify Hawai'i's economy into sectors such as high tech.
"Tourism is going to be the big driver this year along with construction," said Byron Gangnes, a University of Hawai'i associate professor of economics. However, "We continue to say that tourism is going to have to slow because of the constraints and high occupancy rates, but if you look at the first two months of this year, you don't see that yet."
Despite a deceleration of visitor arrivals and home sales growth, personal income and jobs are forecast to rise this year and next. In its forecast for this year, the UH economic researchers expect payroll job growth of 2 percent and real personal income growth of 2.7 percent. Next year, payroll job growth is expected to dip to 1.5 percent with real income growth easing to 2.6 percent.
Honolulu's inflation rate is predicted to peak at 3.8 percent this year on higher housing and energy costs. In 2006, inflation is forecast to dip to 3.6 percent.
Hawai'i's jobless rate is forecast to hold steady at 3.2 percent this year and next.
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.
Visitor arrivals are still forecast to rise 4.9 percent this year to top the 7 million mark for the first time ever. However, the rate of growth could slow to 1.6 percent next year because occupancy rates are already high and a limited number of new hotel rooms are being built, the UH Economic Research Organization said in a forecast released yesterday.
Visitor arrivals will surpass the 7 million mark this year, according to UH economic researchers, but the tourism growth rate may slow considerably next year because accommodations are getting tight.
