Bank of Hawaii's chief economist predicts the state's economy will continue to erode but should improve during the first half of 2009.
Paul Brewbaker lowered his predictions for his visitor arrivals for 2008 as a result of the financial market volatility and the drop in U.S. consumption in the gross domestic product. He also lowered his visitor arrival and job forecasts for 2009.
He now sees total visitor arrivals by air declining 10.6% in 2008 compared, with his earlier forecast of 6% made in August. In 2009, Brewbaker is forecasting a 0.2% decline, versus his previous forecast of a 3.8% increase.
"If oil prices that have fallen to date remain at current levels through next year because of the slowdown in global economic growth, then the low airfares could continue to support the tourism economy, which now has been augmented by lower hotel room rates that weren't the case a year ago," Brewbaker said. "If that happens, then the tourism recovery is a fairly secure part of the forecast moving through 2009."
Brewbaker believes lower oil prices will translate into lower transpacific airfares and, along with lower hotel rates due to declining occupancy levels, will entice tourists to return to Hawaii in growing numbers.
He said there was "a glimmer of light that Hawaii has very quickly become a comparatively much more affordable destination than it was a year or two ago," he said.