State economists have lowered the economic forecast for 2013 because of an expected slowdown in the visitor industry.
Anticipated cuts in the number of flights to the islands and continued depreciation of the Japanese yen is driving the lower projections by the state Department of Business, Economic Development and Tourism.
Alaska Airlines and United Airlines have announced combined cuts of about 615 flights starting in the second half of 2013, while the Japanese yen has depreciated by about 20 percent compared with last year, said Chief Economist Eugene Tian.
“Mainly the reason is the slowdown in the visitor arrivals,” he said. “The Japanese yen depreciation will impact visitor spending (because) the trips are more expensive now. Once they’re here, they spend less.”
The latest projections are less optimistic than a February forecast, including the predictions for gross domestic product, job growth, as well as the visitor spending.
Visitor industry:
>> DBEDT now projects overall visitor arrivals will increase by 4.3 percent — 1.1 percentage points lower than its previous forecast — to 8.34 million, while visitors are expected to spend $15.34 billion,
5.6 percent more than they did last year, down 1.5 percentage points from the previous estimate.
>> The estimated growth of visitor days also was lowered, to 3.1 percent from 5.3 percent, primarily due to the reduction in air seats from the mainland.
Job growth:
>> The number of nonagricultural jobs in Hawaii is now expected to increase
2 percent, 0.2 percentage points lower than previous forecast.
Real gross domestic product:
>> DBEDT expects real GDP to grow 2.4 percent in 2013, down 0.2 percentage points.
However, Hawaii’s overall growth rate is still outpacing that of the nation. Real personal income growth and inflation are unchanged from the previous forecast at 2.6 percent and 2.3 percent, respectively.
“We also see the construction industry is growing. It is very strong so there is an offsetting factor,” Tian added. “(Economic growth is) slower than we expected at the beginning of the year, (but) it’s still better than the U.S. overall.”
The U.S. economy is expected to grow 2.1 percent this year, according to a consensus forecast by the top 50 economic forecasting agencies.
| ECONOMIC OUTLOOK |
| Percentage change through 2014: |
| |
2012 |
2013 |
2014 |
| Visitor arrivals |
9.6% |
4.3% |
2.5% |
| Visitor spending |
18.5% |
5.6% |
4.8% |
| Honolulu inflation rate |
2.4% |
2.3% |
2.2% |
| Personal income* |
1.4% |
2.6% |
2.9% |
| Wage and salary jobs |
1.9% |
2.0% |
1.8% |
| Gross domestic product* |
1.9% |
2.4% |
2.3% |
| * Adjusted for inflation |
| Source: Department of Business, Economic Development and Tourism |
