A two-year reduction in Hawaii’s economic growth is expected largely from losses stemming from the Aug. 8 fire that destroyed Lahaina, a state report forecasts.

The state Department of Business, Economic Development and Tourism expects that Hawaii’s economy will lose about $600 million in previously expected growth this year and about twice as much next year.

DBEDT on Wednesday revised its statewide economic growth projection for 2023 to 1.1%, down from a previously expected 1.8%, which equates to $626 million less in gross domestic product adjusted for inflation.

This measure, which is known as real GDP and represents the value of all goods and services produced in the state, also is not expected to grow as much in 2024 mainly due to losses stemming from the wildfire that include income from businesses, jobs and tourism. DBEDT expects 1.5% real GDP growth next year instead of a previously expected 2.0%, which amounts to a $1.25 billion downward change.

“The Maui wildfires impacted not only West Maui, but our entire state and the lives of our residents in many ways and have affected our economic recovery from the COVID-19 pandemic,” James Kunane Tokioka, DBEDT director, said in the report.

Hawaii’s economy had nearly fully rebounded from a downturn in 2020 triggered by the pandemic, reaching 97% recovery through the first quarter of this year compared with the same period in 2019, the report said, citing U.S. Bureau of Economic Analysis data.

The local economy is still expected to continue rebounding and growing, but just not as much because of impacts from the Lahaina wildfire that destroyed about 2,200 structures, damaged about 500 more and killed at least 115 people.

DBEDT said in its report that more than 800 business establishments, which employed about 7,000 workers, were lost in Lahaina. Revenue from just those businesses is estimated at $2.7 million a day.

Two weeks after the fire, there were 4,449 initial unemployment claims filed in Hawaii, up from 865 a week earlier and a weekly average of 130 before the fire, the report said. There also were an additional 2,705 initial claims filed three weeks after the fire.

About 2,000 of the destroyed buildings were homes, half of which were occupied by renters who paid an estimated $1,700 a month in rent, according to the report citing some U.S. Census data. That means $1.7 million in monthly rental income disappearing from Maui’s economy.

DBEDT also reported that tourism on Maui has declined with some hotels lost and others in West Maui being used to house displaced residents and relief workers.

Some 88 trans-Pacific flights were canceled in August, representing 23,083 air seats, according to the report, which also said passenger arrivals at Kahului Airport fell by more than 70% after the tragedy to 2,000 a day from 7,000 a day.

DBEDT estimated that losses from business closures and visitor spending on Maui have been $11 million a day since Aug. 9.

State and hotel industry officials have been trying to encourage tourists to visit other parts of Maui, including Wailea, Kihei and Kahului, so as not to make job and economic losses worse than they already are on the island.

“We are working with local communities on an opening plan that is strategic, timely, and sensitive to the concerns of the Lahaina wildfire survivors and businesses of West Maui,” Gov. Josh Green said in the report. “In the meantime, all other areas of Maui and the rest of Hawaii are safe and open to visitors, and we continue to welcome and encourage respectful travel to our beautiful state, which will support our local economy and help speed the recovery of those who have already suffered so much.”

This year through July, statewide visitor arrivals had recovered to 95.6% of its 2019 level. But now, DBEDT expects a significant decrease for August and flat arrival volume from September to November before a resumption of growth in December.

The agency expects nearly 9.8 million visitor arrivals this year followed by annual increases of 200,000 or so that would result in about 10.4 million arrivals in 2026 to roughly match the 2019 record.

Largely because of inflation, visitor spending already is at record levels. DBEDT forecast that such spending will total $21.2 billion in 2023 and rise to $23.6 billion by 2026.

Because of expected work to rebuild Lahaina, much of which will be funded by the federal government, DBEDT anticipates that Hawaii’s economy will expand in 2025 and 2026 a little more than previously expected.

The agency forecast 2% growth in each of those two years. In its prior forecast made in June, the agency had forecast growth of 1.9% in 2025 and 1.8% in 2026.