Now that a significant part of Hawaiʻi’s economy has been shut down to slow the spread of the coronavirus, how rapidly will economic conditions improve as the positive effects of government relief measures are felt, and as restrictions are gradually eased over the coming weeks and months?
A blog post by the University of Hawaiʻi Economic Research Organization (UHERO) on May 4 describes developing baseline assumptions about the state’s recovery, potential alternative paths and how such assumptions will be key drivers of the economic forecasts to be released later this month.
There will be progress in rolling out screening, testing and tracing of visitors, which will allow for reopening of the visitor industry by the last week of July, although the pace of visitor return will be very slow. By December, only half of the arrivals lost to the COVID-19 pandemic will have been recovered in UHERO’s baseline scenario.
The pace of recovery of the non-tourism economy will be more rapid than for tourism, but would still be measured. “We assume that the process of reopening businesses will continue gradually in May, and that once the stay-at-home order is lifted, local consumption will ramp up slowly at first as businesses and consumers adjust to a ‘new normal,’” said UHERO.
- By December 2020, 75 percent of economic activity lost due to the stay-at-home order will have been reversed.
- By the fourth quarter of this year, of the 220,000 lost jobs due to COVID-19, 110,000 will have been recovered. While this represents significant progress, the unemployment rate will likely remain well into double-digits at year’s end.
- In a pessimistic scenario, there will be no significant tourism reopening until the last week of September.
- For locally-focused firms, the main development supporting a more optimistic outcome is a robust public health environment, with testing, tracing and isolation efforts that contain the virus in Hawaiʻi.
—By Lisa Shirota