Hawai‘i May See Double-Digit Economic Downturn In 2020
Because of this, Hawai‘i is one of the hardest hit states economically by the coronavirus, but it has also proven one of the most effective against the spread of the virus and the resulting death toll.
On Friday, the state Department of Business, Economic Development and Tourism released its second-quarter 2020 Statistical and Economic Report. The department projects Hawai‘i’s economic growth will fall by 12.1% in 2020 due to the COVID-19 pandemic.
Initial unemployment claims started to surge during the week of March 16, and totaled 232,893, as of the end of May 16, 2020 — an increase of 2,081% from the same period a year earlier.
After declining 53.7% in March, the number of visitor arrivals was only 3,565 in the full month of April, while the average daily visitor arrivals in 2019 was 28,562. During the first 21 days of May, visitor arrivals to the state totaled 5,397. The daily visitor count (257 per day) now is more than double the April daily count (120 per day).
Most Hawai‘i businesses surveyed had applied for some type of federal financial assistance, but half of businesses had not received assistance when they were surveyed. The first week of the survey corresponded with the opening of the second wave of federal funding for the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL). Businesses that did not get their applications submitted in time for the first round of funding were eligible to have their applications reviewed during the second round, which is still ongoing.
The report is based on certain assumptions. Since the global COVID-19 pandemic and accompanying tourism shutdown are unprecedented, Hawai‘i’s economic forecast cannot be generated using past trends. However, basic relationships between economic variables remain unchanged, such as the relationship between job count and unemployment, personal income and GDP.
Due to the government assistance programs, there will be a significant increase in personal transfer receipts from the federal government, which consists of income payments to households in which no current services are performed. The federal assistance will be reflected in household spending.
Based on these assumptions:
- DBEDT projects that Hawai‘i’s economic growth rate, as measured by the real gross domestic product GDP, will drop by 12.1% in 2020, then will increase at 0.7% in 2021, 0.6% in 2022 and 1.1% in 2023.
- Hawai‘i will welcome 3.4 million visitors in 2020, a decrease of 67.5% from the 2019 level.
- Visitor arrivals will increase to 6.2 million in 2021, 8.3 million in 2022 and 9.4 million in 2023.
- Visitor arrivals will not reach the 2019 level until 2025, based on the assumptions. Visitor spending will decrease more during the next few years due to the decrease in daily spending.
For the full release, go online.