While Hawaiʻi’s economy experienced a severe downturn due to the COVID-19 pandemic, a reduction in the number of positive COVID-19 cases and more U.S. mainland and Hawaiʻi residents getting vaccinated are likely to strengthen the visitor industry and broader local economy as the year progresses. That’s according to the latest University of Hawaiʻi Economic Research Organization (UHERO) forecast for the state.
“Hawaiʻi has managed the COVID-19 pandemic better than many, if not all, other states,” the report stated. “This reflects Hawaiʻi’s ability to almost completely shut itself off in the early stages of the pandemic, but we were also successful in tamping down a summer surge. After a holiday pickup, virus numbers have trended downward to their lowest level since July.“
UHERO says that while full recovery to pre-COVID-19 pandemic employment is still several years away, an accelerated pace of job recovery is expected to build this year.
There is still concern with struggling businesses and economic damage to lower-income households. “Professional workers have been able to continue to work remotely, while many lower-income households are dependent on the face-to-face services that have been hardest hit,” UHERO said. “This has led to disproportionate economic hardship for these families.”
UHERO predicts U.S. tourism to gain momentum into the summer and fall as COVID-19 case counts drop and vaccination rates rise nationally. International markets, however, are expected to lag. UHERO’s baseline forecast estimates that “arrivals recover half their pandemic losses by July, and visitor spending recovers nearly 70% of its losses by year end. Full recovery is still several years out.”
The strength of Hawaiʻi’s economic recovery is contingent upon a continued reduction in positive COVID-19 cases, a gradual end to social distancing, the extent to which businesses can stay afloat and an uptick in visitor arrivals and spending.
UHERO offers an optimistic local outlook if vaccinations surge by summer in the U.S. and international markets, and spending increases from the coming fiscal stimulus and pent-up demand. A slowdown in vaccinations, another rise in COVID-19 cases, a decrease in employment prospects and/or more business failing would result in delayed economic recovery.
UHERO is housed in UH Mānoa’s College of Social Sciences.
This work is an example of UH Mānoa’s goal of Excellence in Research: Advancing the Research and Creative Work Enterprise (PDF), one of four goals identified in the 2015–25 Strategic Plan (PDF), updated in December 2020.