Two prominent Hawai'i economists say the state's vibrant economic growth of recent years is likely to flatten somewhat, but there are no signs of a significant downturn.

"I don't know anyone who isn't predicting a soft landing" for the economy, said Leroy Laney, a Hawai'i Pacific University economy and finance professor and consultant to First Hawaiian Bank.

One of the strengths for Hawai'i is how well China, Japan and other nations in the region are doing, said Jack Suyderhoud, a University of Hawai'i professor of business economics.

"The strength of the economies in Asia are significant for our economy here," he said.

The two were on Kaua'i yesterday for First Hawaiian Bank's 32nd annual Kaua'i County Business Outlook Forum. Their predictions for Kaua'i's economy, scheduled to be presented last night at the Grand Hyatt resort in Po'ipu, were similar to their assessments of the statewide picture.

A number of factors are driving a slowdown in growth. Inflation numbers were high for the first half of the year in Hawai'i, Laney said, and Suyderhoud said more inflation may be present than is accounted for in national economic assessments. Suyderhoud said he expects the Federal Reserve Board to raise interest rates a little more, although not necessarily in today's meeting.

But neither Laney nor Suyderhoud expects much more tightening. Both said they believe interest rates are near their peak for the foreseeable future.

High prices for oil, a leveling of the California real estate market and geopolitical issues involving nations like Iran, Iraq and North Korea all prevent an exuberant economy, but given that, things are doing remarkably well, Suyderhoud said.

"The good news is that the world economy continues to do relatively well, but such news also comes at a cost reflected in higher commodity prices and the potential for inflation," he said.

For the United States, he said, "I am with those who are suggesting that the rapid growth of the last few years has come to an end, for a while." But he added, "Please note that deceleration does not mean decline. All I am saying is that growth, while still positive, will be less than in the last two years."

Laney said that Hawai'i's economy is now in the 10th year of expansion, and that a little slowing is probably a good thing. Unemployment, now the lowest in the nation for two years at about 2 percent, will help slow business growth, because of the difficulty in finding workers, he said.

"Workers are harder to find. That will continue to be one constraint on the current expansion. It's aggravated by rising living costs," he said.

Tourism is strong, with visitor spending up last year and trending up again this year, Laney said. The Pacific Missile Range is growing in economic influence and the construction industry on Kaua'i is booming. But Laney said the number of building permits issued has slowed and local builders are keeping a wary eye on the slowing national housing development field.

In real estate, speculators have pulled out of the Kaua'i market, he said. The number of sales has dropped 30 percent for the first half of 2006 over the same period in 2005, and prices have slowed their rise — but he said that's a good thing.

"No market can sustain those steep increases year after year, nor would we want it to — because it makes it impossible for those who just live and work here to afford shelter," Laney said.

Reach Jan TenBruggencate at jant@honoluluadvertiser.com.