HONOLULU — Hawaii’s economy should grow slightly faster this year as the recovery continues and expands beyond the tourism industry, University of Hawaii economists said Friday.
Gross domestic product is likely to grow 2.9 percent this year, up from 2.6 percent last year, the university’s Economic Research Organization said in a report.
Tourism industry growth has slowed as a weaker yen depresses spending by Japanese travelers. Rising prices for Hawaii hotel rooms and automatic federal government budget cuts are contributing to a decline in mainland visitors, said economist Carl Bonham, one of the report’s authors.
The report forecasts visitor arrivals will increase 0.7 percent this year, compared with 2.5 percent last year and nearly 10 percent in 2012.
The construction industry, in contrast, is picking up as new residential condominiums and retail stores are built and Waikiki hotel rooms are renovated. Construction permits for new homes and condominium towers jumped more than 40 percent last year on Oahu, indicating a large volume of projects are in the pipeline.
Government spending will stop weighing down the state’s economy as the effects of the federal budget cuts, also known as sequestration, fade. Federal worker jobs dropped by 3 percent last year, Bonham said, but should be flat this year.
“So instead of getting a roaring economy as you might have if you had construction and the visitor industry and the government all contributing at the same time, things are not quite as synchronized, and so you end up with a little bit more modest growth,” he said. “And hopefully a more sustainable recovery.”
The unemployment rate will likely fall to 4.2 percent from 4.7 percent as hiring becomes more measured than the past few years, the report said. But the economists expect personal income to climb 2.9 percent — compared with 1.9 percent last year.
Tighter labor markets and profitability “should allow workers to begin to share more fully in the benefit of economic growth,” the economist said.