For Immediate Release: March 1, 2005
DBEDT Release News 05-08

Honolulu--The state's economy remains on course for solid gains in tourism, jobs and personal income in 2005, according to the latest economic forecast by the Department of Business, Economic Development and Tourism (DBEDT).

Presented in the First Quarter 2005 issue of the Department's Quarterly Statistical and Economic Report, the forecast expects Hawaii's Gross State Product (GSP) to grow 3.1 percent in real terms this year. This is more than a half-percentage point above the previous forecast issued in November 2004.

Total wage and salary jobs are now expected to increase 1.8 percent, compared with a 1.5 percent projection in the last forecast.

"Thanks to continued strength in construction and tourism, federal spending, and the pro-business initiatives of the Lingle-Aiona administration we expect to see more than 10,600 new wage and salary jobs created in the state during 2005," said DBEDT Director Theodore E. Liu.

The department also cites expected growth in both the U.S and Japan economies as a factor in the improved outlook for the state's economy. The U.S. real gross domestic product (GDP) is forecast to grow 3.6 percent in 2005, while Japan's GDP is expected to grow at a moderate 1.6 percent rate.

The tourism industry is expected to host a record 7.2 million visitors in 2005, up 3.4 percent from a very strong 2004. Visitor spending should reach $11.2 billion in 2005 about 4.4 percent higher than 2004.

As in 2004, the report predicts that inflation will affect economic gains this year. The Honolulu Consumer Price Index (CPI-U) is expected to increase by 3.2 percent in 2005, only slightly below the 3.3 percent rate experienced in 2004. Thus, while Hawaii personal income is expected to show a 6.0 percent growth in current dollars this year, price increases will hold the gain to 2.7 percent in real terms.

DBEDT economists are expecting continued growth for the economy in 2006 and beyond, though at a slower pace. The report shows the real GSP growth easing from 2.8 percent in 2006 to about 2.5 percent by 2008. Total job growth is expected to stabilize at about 1.3 percent per year beyond 2005. Total visitor arrivals are projected to grow 2.8 percent in 2006 and 2.3 percent by 2008.

Fourth quarter jobs grew 3.4 percent from the same quarter in 2003. Growth was led by a 10.6 percent increase in information industry jobs. The transportation, warehousing and utilities group posted a 7.4 percent increase in jobs, with retail trade jobs increasing third fastest at 5.7 percent.

Tourism arrivals rose 7.0 in the fourth quarter of 2004 from the same period of 2003. A 9.3 percent increase in domestic arrivals for the quarter was accompanied by a 2.6 percent increase in international arrivals.

State General Fund revenues increased by 9.8 percent in the fourth calendar quarter of 2004 compared with the same quarter a year earlier. General Excise Tax Revenues were up 10.3 percent for the quarter, with net Individual income taxes up 5.1 percent.

The Quarterly Statistical and Economic Report contains more than 100 tables of the most recent quarterly data on Hawaii's economy as well as narrative explanations of the trends in these data. The full report is available on the internet at www.hawaii.gov/dbedt/info/economic/data_reports/qser.

For more information, contact:
Dave Young
Communications
Phone: (808) 587-1212
Email: dyoung@dbedt.hawaii.gov