HONOLULU (AP) - A new state economic forecast downplays the long-term impact of recent layoffs and bankruptcies.

The report reduces economic expectations for the fiscal year that began July 1 from 2 percent growth to 1 percent but sees better years ahead.

''Some people are panicking, but the numbers aren't that bad,'' said Pearl Imada Iboshi, state economist, noting that economic trends go through cycles. She said recent developments are a shock but do not portend the collapse of the island economy.

The report by the state Department of Business, Economic Development and Tourism assesses the loss of Aloha and ATA airlines, Molokai Ranch and two of NCL America's Hawaii-based cruise ships, as well as Maui Land & Pineapple's laying off of 274 works amid rising gas prices.

More than 5,200 people

have been laid off from jobs in the state this year as gas prices soar and push other costs up throughout the island economy.

July's seasonally adjusted unemployment rate was at 3.9 percent, a five-year high in a state that traditionally has had among the lowest unemployment rates in the country. Nationally, the rate is 5.7 percent.

Tourism also has dropped by more than 14 percent compared to a year ago - the biggest drop in more than six years. And inflation was at nearly 5 percent in the first half of the year.

Iboshi points to good news in recent weeks, such as the decline in crude oil prices.

''I really believe that over the longer term that people will not give up traveling and vacationing,'' she said.

Still, she is now forecasting a 6.7 percent drop in visitor arrivals this year, compared with the 3 percent she had been predicting.

She says visitor expenditures will drop 6.4 percent, a reversal from a projected 0.5 percent increase.

But for 2009, visitor arrivals are expected to decline only 0.8 percent, with expenditures rising 2.9 percent.

Iboshi said federal and military spending will hold steady and overall growth is expected in construction. Among major tourism-related projects are renovations for Sheraton in Waikiki and the islands' first Disney hotel to be built at Ko Olina on Oahu.

She also cited continued job growth, with the number up 0.6 percent through the first half of the year.

Bank of Hawaii chief economist Paul Brewbaker said he is struck by the Hawaii economy's resilience, with military housing construction offsetting declines in new civilian housing.

He noted that local housing prices remain stronger than those in Mainland markets.

''There are things that are way worse than anyone thought,'' Brewbaker said. ''Despite all of that, things are kind of holding together. It's actually not as bad as some people think.''