KAHULUI, Maui — After an 11-year economic expansion, Maui will see "little or no growth" in the near future as the financial market meltdown and high fuel costs continue to take a toll, according to First Hawaiian Bank economic adviser Leroy Laney.

The county's projected unemployment rate of 4.5 percent in 2008 is expected to top the state figure, while the tourism and housing sectors will continue to weaken, Laney said yesterday while on Maui for the bank's 34th annual Maui County Economic Outlook Forum at the Maui Beach Hotel.

Instead of painting a picture of gloom and doom, Laney characterized the economic upheaval as a "cooling off" period required to allow infrastructure and slowly rising income to catch up.

"Simply put, the economy occasionally needs to catch its breath," he said.

Maui led the state's decline in visitor arrivals last year and was the only island to see a drop in spending, said Laney, a professor of economics and finance at Hawaii Pacific University. The declines have worsened in 2008, with Maui arrivals down 6.3 percent over the first half of the year and visitor spending sinking 5.2 percent.

He attributed the trouble in tourism to the financial situation on the Mainland and the closure of Aloha Airlines and ATA. Thankfully, Laney noted, the loss of those airline seats already is being offset by new Alaska Airlines service from Seattle and Anchorage to Maui, and increased United flights.

There has been no such comfort for the helicopter and boat tours, lu'au operators and other activity businesses that relied heavily on Norwegian Cruise Lines, which reassigned two of its three ships that were plying Hawaiian waters.

The decline in ship passengers and crew members arriving at Kahului Harbor has hurt retailers, especially at the island's biggest mall, Queen Ka'ahumanu Center in Kahului, where sales are down this year, according to Laney.

"Higher gas prices are eating into household budgets and retailers feel the effect of higher energy prices in their costs, also," he said. "On a brighter note, tenants are able to fill job vacancies more easily with the cooling labor market."

Whalers Village in Ka'anapali and other retail centers close to time-share units are faring better because those types of accommodation typically see higher occupancies, Laney said.

In the agricultural sector, farmers large and small are hurting.

Pineapple took a hard hit with the 274 layoffs announced by Maui Land & Pineapple Co. in July, and small Upcountry farms are suffering from a shortage of field workers and high fuel costs.

Hawaiian & Commercial Sugar Co. is attempting to avoid a similar fate as its pineapple counterpart by investing more than $10 million in specialty sugar products such as its "Sugar in the Raw" brand. Market trends are working in the plantation's favor, Laney said, with a move away from high fructose corn syrup to evaporated cane juice.

The slowing economy also is causing developers to shelve or delay projects. Laney said permits for residential construction on Maui have seen a string of quarterly declines starting in 2007. Fewer projects are being approved and those have been smaller ones, he said.

Also affecting development is a new county ordinance that requires developers to identify water sources before they can obtain water meters.

Some Maui builders are switching from residential to commercial construction, where there is pent-up demand despite the slowing economy. On the boards are a mixed-use project near the Maui Lani residential development with 50 acres of commercial space and Alexander & Baldwin's 179-acre Business Park II in the Dairy Road area of Kahului that is scheduled for late 2010 or early 2011.

A&B Kahului Town Center mixed-use project is scheduled for 2010, and the company is moving ahead with its Wailea residential projects.

The only visitor-related construction projects are the Honua Kai time-share in Honokowai, the nearly completed Kaanapali Ocean Resort Phase II and Marriott's Maui Ocean Club time-share's Napili Tower.

Laney said Maui single-family home resales were down 27 percent in the first half of 2008, while condo resales were off a smaller 18 percent. Single-family prices fell 9 percent, however, and condo prices actually rose 10 percent.

One bright spot highlighted by Laney was the developing higher education sector surrounding Maui Community College. The school has about 3,000 students, 200 employees, an annual budget of almost $40 million, and $68 million in federal and state grants, Laney said.

In addition, a small but resilient high-tech sector that includes astronomy and alternative energy projects continues to blossom, he said.