The Department of Business, Economic Development and Tourism (DBEDT) has released its first quarter 2025 Statistical and Economic Report, adjusting Hawai‘i’s economic growth projection for 2025 to 1.7 percent. This marks a decrease from the previous forecast of 2.0 percent, primarily due to an anticipated slowdown in tourism growth, increased consumer inflation, and rising policy uncertainty at both national and international levels. The DBEDT expects economic growth to reach 2.0 percent in 2026, with a steady pace continuing into 2028.
Despite these challenges, the labor market is predicted to remain stable with low unemployment rates. “While the domestic and international economic outlook has become more uncertain, we expect Hawai‘i’s economy to demonstrate resiliency,” said DBEDT Director James Kunane Tokioka.
Hawai‘i’s economy exceeded pre-pandemic levels by 1.5 percent during the first three quarters of 2024, although it was one of the slowest states to recover from the COVID-19 recession compared to the U.S., which recovered by early 2021.
Tourism-related sectors have not fully returned to pre-pandemic levels as of late 2024 but non-tourism sectors have shown robust growth. However, there are still job shortages in several areas compared to pre-2019 levels.
Visitor arrivals recovered significantly in 2024 but are expected to face challenges in the coming year due to decreased flights from international locations such as Japan and Canada.
The construction industry remains strong with positive impacts anticipated for future activities. Home sales increased by over 15 percent during 2024 with average sale prices for homes also on the rise.
Consumer inflation remains high in Honolulu compared to national figures. Inflation was driven mainly by housing costs which rose substantially over previous years.
Looking forward, visitor arrivals are projected to grow modestly while non-agriculture payroll jobs are expected to continue increasing gradually until full recovery by 2027.
Director Tokioka noted optimism about various sectors: “In addition to firm performance in the construction industry, we will continue to see growth in other industries including professional services and healthcare.”
For more detailed information on these projections and other economic indicators, refer to DBEDT’s full report available online.
