University of Hawaii economists say the state’s long-running expansion isn’t through yet.

With global conditions improving and the tourism industry continuing to set records, the University of Hawaii Economic Research Organization said in its latest forecast due out today that the state’s economy will continue to grow even as the upward trajectory slows going out to 2020.

UHERO boosted its outlook for visitor arrivals this year and next year, projecting a 4.7 percent increase to 9.2 million visitors in 2017 and a gain of 2.8 percent to 9.5 million visitors in 2018. Those percentage gains are up from 4.1 percent and 1.5 percent, respectively, for the same time period in UHERO’s September report.

“The expansion is now well into its eighth year, and all indications are that growth will continue, if at a more subdued pace,” UHERO wrote.

UHERO also revised upward its projection for Hawaii’s inflation-adjusted gross domestic product — the broadest measure of economic output — to 1.1 percent this year and 1.4 percent in 2018. That’s up from 0.6 percent and 1.3 percent, respectively, in its last report.

“Global economic conditions have improved this year, beating expectations for the first time since 2010,” said UHERO, noting that the improvement provides a favorable environment for continued expansion in the islands.

“International trade has begun to pick up, and spending by households and businesses is rising in many countries. Still, the pace of trade and economic growth remains subdued compared with past expansion.”

UHERO said increased airline seat capacity and room capacity — due to more non-traditional accommodations — have resulted in a sustained surge in the number of visitors even as spending lags on an inflation-adjusted basis.

“In 2018, arrivals from the U.S. and Japan will grow at about half their 2017 pace, while improving economic conditions in the Asia- Pacific region will sustain moderate growth for emerging markets,” UHERO said.

Japan, which is Hawaii’s largest international tourism market, has seen its inflation-adjusted GDP expand for six consecutive quarters, and even though UHERO expects that expansion to continue, it will be at a declining rate in the headwind of labor shortages and looming tax increases.

While tourism continues to flourish and the unemployment rate is the lowest in the nation, the pace of job creation has slowed as the construction cycle has leveled out after peaking in mid-2016.

“With labor market conditions increasingly tight, the scope for further employment gains is limited,” UHERO said. “The fastest job growth next year will be in tourism-related areas and in health care, while employment in construction and the public sector will remain at roughly its current level.”

UHERO said the pending overhaul of the U.S. tax system will create a near-term boost in Hawaii but raises longer-term concerns with possible U.S. restrictions on trade and immigration adversely affecting the state.