COVID surge delaying state economic growth

LIHU‘E — A surge in COVID-19 infections across the islands has prompted more delays in Hawai‘i economic growth, according to experts.

The state’s economic growth projection for 2021 has dropped to 2.7%, down from the 3.5% projected in May this year, according to the state Department of Business, Economic Development and Tourism third-quarter 2021 Statistical and Economic Report released Thursday.

“Hawai‘i’s economy was on a clear path towards recovery and was gaining momentum over the first seven months of 2021,” DBEDT Director Mike McCartney said in the release.

“Due to the rapid spread of the delta variant, this new spike in COVID-19 cases has created economic uncertainty. Our time and attention have shifted to focusing and responding to public-health needs, which has diverted our efforts to recovery and growth. It’s clear that Hawai‘i’s economic prosperity is dependent upon effective public-health practices.”

Projections show the state will have about 6.8 million visitors in 2021, a 65% recovery from the 2019 level, DBEDT reported.

However, in August, visitor arrivals have slowed down due to the delta variant. The state’s daily visitor count during the first 25 days of August was 24,890, which is lower than the average daily arrivals this June at 26,368, and July at 28,737, according to the report.

However, this shows that domestic visitor numbers are about 20% above pre-pandemic 2019-levels, McCartney reported.

“Our labor market continues improving and our job growth in July 2021 was the highest among all the states in the nation at 10% over-the-year growth,” McCartney said. “Our unemployment rate decrease in July was the second-fastest drop in the nation in terms of over-the-month decrease, according to the most recent U.S. Bureau of Labor Statistics data.”

As economic growth expands, unemployment will slowly go back to the average unemployment rate of 2.5% from between 2017 to 2019. In 2021, the rate is projected to be around 7.6%, and 6.4% in 2022.

The slowdown of the state’s economic growth rate is on trend with national statistics. This month, the Blue Chip Economic Indicators revised growth projections to 6.2%, down from 6.6% in May.

“In order to regain our economic momentum and to malama Hawai‘i (to care for) with mutual respect and aloha, I humbly ask for everyone’s help and cooperation to follow our public-health protocols by getting vaccinated and wearing a mask,” McCartney said. “If we do just this, our economic future will be much brighter, balanced, sustainable, with more certainty and diversity.”
Source: The Garden Island