Posted on: Sunday, January 28, 2001
Experts predicting no slump in Islands
By Glenn Scott
Advertiser Staff Writer
In a variation on a cyclical theme, the state’s leading economists say Hawai‘i’s economy this year should maintain moderate growth even as the Mainland’s economy slips far below last year’s performance.
That optimism for a second year of steady growth doesn’t seem to fit with the somber messages from Mainland experts, who say the national economy will achieve only about half the growth rate it saw in 2000.
But economists here say they expect the state to continue its economic upswing, achieving what will be a second year of statewide recovery after a decade-long slump.
"There’s some inertia that will keep the economic activity growing. So overall, there will be pretty respectable growth here," said Christopher Grandy, an economist with the state Department of Business, Economic Development & Tourism. "It’s nothing to sneeze at, particularly in light of the experiences here the last 10 years."
3 percent growth predicted
Individual forecasts vary slightly, but local economists are predicting that after about 3 percent overall growth in 2000, the state economy should swing along at a similar rate this year.
An economic crash on the Mainland economy would, of course, change the picture here. But the expectation of slower Mainland growth is not deterring local forecasters, who say the Mainland downturn should not alter the improving commercial scene in the Islands, or the important pattern of visitors arriving for vacations, conventions and business meetings.
"I don’t think the slowdown is going to be substantial for the Islands," said David McClain, an economist and dean of the University of Hawai‘i College of Business Administration.
Thus, those who inspect the moving parts of an economy see another good year for tourism, with slight gains but not the record-setting increases of 2000. Related to that, Island residents’ personal income is expected to keep rising at about 3 percent this year, and the resurgence in certain construction sectors, notably residential building, should keep driving gains on all major islands.
Researchers for the state Department of Business, Economic Development & Tourism recently lowered their 2001 economic growth estimate from 2.9 percent to 2.7 percent after watching the national economy cool significantly during the second half of last year.
But Grandy said that, barring more urgent problems, no economist expects Hawai‘i’s economy to cool at the same speed as the Mainland’s.
Some are more optimistic
Economics researchers who run the University of Hawai‘i Economic Research Organization are calling for a 3.5 percent gain this year, predicting the economy will grow at its fastest pace since 1990. One reason: They predict that local activity, such as 11 percent growth in construction business, will add more vitality.
"Local demand will take over as the main catalyst of growth," said professors Carl Bonham and Byron Gangnes in their outlook report issued last month.
Bank of Hawai‘i economist Paul Brewbaker also has forecast 3.5 percent growth for the state, saying that Neighbor Island construction has led the recovery.
In his forecast for First Hawaiian Bank, economist Leroy Laney, a professor at Hawai‘i Pacific University, said his 3 percent estimate for 2001 may pale against the 5 percent growth rate California achieved last year.
"The 3 percent figure," he said, "is still quite upbeat, however, and very welcome compared to the lackluster performance over the past decade."
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