Hawaii’s economy will enjoy steady growth through at least 2016, helped by solid visitor spending and continued job growth, the state Department of Business, Economic Development and Tourism reported Monday in its latest quarterly forecast.
One of the keys to the forecast is lower-than-expected inflation, which encourages greater household spending and business investment.
The department ratcheted up its inflation-adjusted gross domestic product estimate to 2.6 percent for 2013, up from the previous forecast of 2.4 percent delivered three months ago. GDP is the broadest measure of economic growth. The GDP projection for 2014 was revised to 2.4 percent from 2.3 percent.
"We continue to be sanguine over the prospects for our economy as the state’s third quarter results have validated our previous forecasts of economic growth," said Richard Lim, department director.
The agency expects the Honolulu Consumer Price Index, a measure of inflation, to rise 1.9 percent in 2014, lower than the 2.3 percent previously forecast. Inflation is also relatively subdued at the national level.
Visitor arrivals and spending are both projected to increase from last year’s record levels.
The number of visitors to Hawaii is forecast to reach 8.37 million this year, up 4.3 percent from 2012. The forecast is unchanged from the previous one issued in May. Visitor spending is projected to increase 5.3 percent in 2013 to $15.1 billion. That’s down 0.3 percentage points from the previous forecast.
Hawaii’s unemployment rate dropped to 4.9 percent during the first half of 2013, and is forecast to average 4.8 percent for the entire year. That would be the lowest annual average since 2008 when the jobless rate averaged 4.1 percent.
The report also noted that the private sector added 9,600 nonagricultural payroll jobs from January through June, a 1.5 percent increase from the same period a year earlier. Construction led the way with an additional 2,625 jobs.
Issuance of building permits, a precursor of construction activity, grew by 11.6 percent during the first half of 2013 from the same period a year earlier, the department said. The increase indicates that "construction workers will be busier in the months to come," according to the report.
State general excise revenue, an indicator of current economic activity, gained 8 percent during the first six months of the year, the department reported.
