After several years of robust expansion, Hawai'i's economy is expected to grow more moderately this year, according to a report released yesterday by the Department of Business, Economic Development and Tourism.

That forecast is in line with expectations of private-sector economists, who generally predict slower economic growth, but no recession for the state. The cooling comes as both the construction and tourism sectors plateau after an exceptional run-up during the past several years.

After a flat 2006, visitor arrivals are expected to increase 1 percent in 2007, according to DBEDT's quarterly economic report. That's a 0.4 percentage point drop from the agency's February forecast. Meanwhile, visitor spending is expected to rise 4.6 percent this year after 3.3 percent growth in 2006. Personal income, total wage and salary jobs, and state gross domestic product are all forecast to increase.

"The state's economy is still on the expansion path after several years of faster-than-the-national-average growth," DBEDT Director Ted Liu said in a written statement.

"Based on our robust job growth and strong construction activities, we are confident in our economic growth projections for the next several years."

Honolulu's consumer price index is now forecast to increase 4.5 percent in 2007, which is half a percentage point higher than in the previous forecast. The increase is pegged to recent increases in energy and housing prices. Next year Honolulu's CPI is expected to rise 3.8 percent, which is up 0.4 of a point higher than the February forecast.

Economists had expected inflation to slow during the last six months of 2006 after an unexpectedly high rise during the first half of last year. However, that slowdown didn't occur, primarily because of rising housing and food costs, according to the U.S. Department of Labor.

Higher prices for homes, as well as other goods and services, are a byproduct of Hawai'i's growing economy.

Higher inflation will lower real or inflation-adjusted income gains this year. Real personal income growth is forecast at 1.8 percent, followed by 1.9 percent growth next year.

The forecast for wage and salary job growth is unchanged at 1.8 percent in 2007 and 1.5 percent in 2008. Hawai'i real gross domestic product growth is predicted to be 2.7 percent in 2006 and 2.6 percent in 2007.

Reach Sean Hao at shao@honoluluadvertiser.com.