LIHU‘E — Pushing back the reopening of trans-Pacific tourism from September to October and the two-week lockdown on O‘ahu has the state forecasting an even-grimmer economic picture than before.
The state is projecting the economy will contract by 12.3% in 2020, according to a state Department of Business, Economic Development &Tourism third-quarter report released last week that analyzes data between April and July 2020. In May, the department forecasted a 12.1% drop to the state’s economic-growth rate.
“The global COVID-19 pandemic is the most disruptive and challenging event in our lifetime,” DBEDT Director Mike McCartney said.
Tourism, which typically drives the state’s economy, has taken a hit, and visitor arrivals will not reach 2019 levels until 2025, the report found.
On Aug. 30, some 1,830 people arrived in the state.
During this same time last year, about 28,000 passengers arrived daily, including residents and visitors, according to the Hawai‘i Tourism Authority. Of those arriving Aug. 30 this year, 10 landed in Lihu‘e, including four visitors, one returning resident and five crew members.
The DBEDT forecast projects the state will only welcome 2.9 million visitors in 2020, a decrease of 71.9% from 2019.
During the second quarter, 1,932 visitors arrived by air on Kaua‘i. That time last year saw 352,662 visitors. This represents a 99.5% drop compared to the same quarter of 2019. This is the steepest decline in arrivals of all the islands, but not by much. Visitor arrivals by air decreased 98.6% in Honolulu, 99.5% in Maui and 98.9% in Hawai‘i County.
But when visitors do return, the state projects spending will be down for the next few years due to “decrease caused by weak demand.” DBEDT projects that visitor arrivals will increase to 7.2 million in 2021, 8.3 million in 2022, and 9.4 million in 2023.
Statewide, between 2017 and 2019, the state’s average unemployment rate was 2.5%. Between April and July of this year, the average unemployment rate was around 18.5%.
In mid-March, initial unemployment claims began to rise. Claims peaked at 53,112 during the first week of April. During the second week of August, initial unemployment claims continued above 5,000 per week. Between 2012 and 2019, weekly initial unemployment claims averaged 1,442 per week.
The unemployment rate on Kaua‘i jumped from 2.7% in the first quarter to 28.2% in the second quarter.
Kaua‘i County lost 8,200 jobs in the second quarter, most in the accommodation and food-services industries. Statewide, the hospitality sector accounted for 58.7% of joblessness.
The state is projecting an average annual unemployment rate of 10.9% this year, decreasing to 7.2% in 2021, then 6.6% in 2022 and 6.3% in 2023.
“We must unite around a single, immediate purpose to stop the spread of COVID-19,” McCartney said. “Let us rally around our health-care and public-health officials by doing our part to regain our community’s health so we can start and sustain our economic recovery.”
He pointed to federal funds, including $9.03 billion in pandemic response money, that can be injected into the economy.
“The safe and responsible reopening of trans-Pacific travel will create economic momentum,” McCartney said.
“Finally, it’s the collective spirit, inner strength, intelligence and innovative nature of Hawai‘i’s people that has always overcome disruptive and challenging events like we face today. Together, again, we will be able to accomplish great things.”
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Sabrina Bodon, public safety and government reporter, can be reached at 245-0441 or sbodon@thegardenisland.com.
