Puerto Rico’s economy facing new realities and challenges
Albeit several positives were observed in 2019, such as the first fruits of the debt restructuring process, it was also a year marked by lack of progress in getting the economy back on track. Once the tail winds from the post Hurricane Maria rebound fizzled, economic activity hit negative territory once again. To make matters more worrisome, there was no significant private sector investment through Opportunity Zones (OZ), key structural reforms remained incomplete while others, such as the pensions system, may yet bring about a severe backlash. This year also saw the formal confirmation of everyone’s worst fears—that US funds for reconstruction will be significantly less than expected at first (around $30 bn less), which, unfortunately, altogether, does not bode well for us in 2020. The economy needs to grow soon, or the assumptions made in negotiating with bondholders may have to be revisited. Something everyone will want to avoid.
Economic highlights of Q3-2019 economic indices for Puerto Rico
Who could imagine Puerto Rico was to witness the resignation of then Governor Ricardo Roselló in August 2019!! Daily protests disrupted sales in shopping centers and on-location retail and other businesses in Old San Juan. A consumer shocked by political corruption became more thrifty conscious. Despite some meager increases in construction jobs, that sector remains in recession. Manufacturing, though geared to export markets, has remained flat and observant of a global slowdown and impacted by the as yet unresolved US-China trade war. The exit of yet another foreign bank – Santander Bank (Spanish owned) – could see the end of bank consolidations in the Island. Will PR start focus on feasible public debt renegotiations under the leadership of the Promesa Board? Will the new Governor choose a path of economic growth? Will President Trump continue to withhold badly needed federal disaster monies? Still, what lies ahead may not be short of drama.