In a speech designed to point out positive aspects of Hawai'i's economy, Gov. Linda Lingle said she remains optimistic about the state's economy and that people shouldn't be discouraged by negative headlines about the national and world economies.

Lingle spoke to the Hawai'i Economic Association's annual conference, telling its members that while the state isn't enjoying the robust growth of just several years ago, Hawai'i's economy hasn't ground to a halt or slipped into recession.

"Our state's economic growth has slowed, but it has not stopped," Lingle said. "Most important indicators show moderate growth, that when contrasted with the rest of the nation is a fortunate position for Hawai'i."

Her remarks were billed as a major economic address, but didn't include new initiatives. Lingle said she wanted to give people who are shell-shocked by negative economic news a clear picture of where the state stands.

It came as economists at the conference noted the number of people visiting Hawai'i will decline this year and that unemployment will rise here.

Nationally there has been talk of a possible recession and worries about state economies where the subprime mortgage crisis and subsequent liquidity and credit crunch have cut into economic activity. Her remarks also came after a run of economic setbacks for the state: the pullout of two cruise ships, the shutdown of Aloha and ATA airlines and the closure of Molokai Ranch.

Residents are also facing rising gasoline and grocery prices.

"The abundance of negative stories about the Mainland and world economies is precisely why I believe an objective perspective on our specific situation is so important," said Lingle, who noted she needed to paint an accurate picture of Hawai'i's economy and why she remains optimistic.

STATE IS SOUND

She said the local problems were caused by business-specific factors and not related to the overall soundness of the state's economy. Molokai Ranch's closure was in large part over longstanding development opposition, she said, while Aloha succumbed to competition and the high cost of fuel. ATA faltered when it lost a big military contract.

"It was unfortunate that these events happened within a 10-day time period, but they were not connected to the status of Hawai'i's overall economy or based on weak fundamentals," Lingle said.

She went on to list a number of positives for the state, including its minimal exposure to subprime mortgage problems and unemployment that is among the lowest in the country. Lingle said the current slowdown is not like the 1990s when speculative foreign investment created a real estate bubble that quickly deflated when the money left as quickly as it had arrived.

Lingle also noted state government remains in sound financial shape, with bond ratings being maintained because of positive tax revenue and employment growth. Some other states, including California and Arizona, are facing multibillion-dollar budget deficits, she said.

Moreover, the state is continuing to invest in various projects, including improvements to airports and harbors, she said. Lingle urged businesses to do the same and not "hunker down" because the economy is slowing.

Among other positives, she noted the Walt Disney Co. has plans to invest in a Ko Olina resort and that the military's stationing of a Stryker brigade here will mean $250 million in new construction and spending.

A new visa waiver agreement between the U.S. and Korea should increase tourism, while long term the state has opportunities to swap imported oil for renewable energy.

TOURISM SLOWS

Economists at the conference agreed the economic outlook isn't as robust as it's been. Bank of Hawaii chief economist Paul Brewbaker said his current forecast is for a 5 percent decline in visitor arrivals this year, though this could change by the time he issues an economic forecast next week. He said almost daily changes in news about possible airline mergers and the number of airline seats between the Mainland and Hawai'i make it difficult to predict.

Brewbaker said economic growth is nil but that he did not think the state would slip into a recession, though there is a higher risk of that occurring than there was a few months ago. He also is forecasting the median price of an O'ahu single-family home will decline to $600,000 in 2010.

Pearl Imada Iboshi, the state's chief economist, said she will be issuing a revised forecast in mid-May that will include a downward adjustment of some indicators. But she said even though unemployment is projected to rise, the state will still be under the national rate and that the state's construction sector still has been growing, given commercial projects and military housing.

"I still think there are enough positive things going on over the construction side that we avoid a recession," Iboshi said.

Byron Gangnes, director of Hawai'i Economy Project for the University of Hawai'i Economic Research Organization, said his group's forecast calling for little growth this year was defunct when Aloha shuttered its passenger operations and laid off 1,900 workers. He said the group will be issuing a revised forecast in June.

But he noted all the focus on whether Hawai'i will enter a recession may be misplaced since it takes focus away from the fact that growth is a lot lower than it was. He said it's difficult to see where the state will get a strong snapback from in the future.

"This is a very different environment from the one we were in a couple years ago," Gangnes said.