Tag: Puerto Rico Economic Pulse©

The PR economy is going through one of its worst times over the past 20 years. While most world economies are defying wars and political turmoil to grow at impressive rates, the island economy has retreated. Even worse, the economy is already in recession.  Many local setbacks and adverse winds blowing from the mainland threaten to derail a timid recovery. This issue reviews the current stage of our economy, highlighting the main obstacles to a coveted rebound. We also present our forecasts up to 2009 and address the most likely economic scenarios here as well as for the mainland. We invite you to view PR’s short-term economic future through our looking glass.

In 2006, Puerto Rico replaced part of the old and fatigued excise tax system with a new one: a sales tax, the UVT, Uniform Value Tax. By shifting to a 7% sales tax, PR has moved in the right direction and joined the many countries in the world that rely on a consumption tax to balance their budgets. However, instead of being part of a long-term plan, the new tax system responds to the urgent needs of a government struggling with mounting debts and current deficits. In fact, many expect the sales tax to be the savior of the budget and end the mess in public finances. This issue provides insights on a system that is novel to Puerto Rico and which opens the door for a more complete analysis of the overall Puerto Rican economy.

Panama is experiencing an economic boom like never before. Known worldwide for the Panama Canal, one of the modern marvels from the past century, this country has managed to overcome pessimism and doubts, and is proving what a small country can do.   A very open economy, which relies heavily on the export of services, Panama is embarked on ambitious projects to take the country to new heights.  The Canal expansion, an avalanche of magnificent skyscrapers, an unstoppable international financial center and an upcoming free trade agreement with the US are among the strengths and achievements that Panama can proudly boast.  Find out how PR can draw some valuable lessons from Panama.

Cuba is still a kind of black box for many of us. Despite the many cultural, historical, idiosyncratic and even familiar bonds with Cuba, Puerto Rico has no economic relations with its neighbor.  Nonetheless, after nearly five decades of a very centralized economy, some recent developments are signaling that the current socioeconomic system in Cuba is about to change. It is definitely time for us to know more about Cuba and understand the implications for Puerto Rico of the foregone Cuban transition towards a market economy. When will Cuba open? Will it entail the demise of tourism and manufacturing in Puerto Rico? Or, will this transformation open up opportunities for PR? Do not miss this interesting analysis on this very strategic issue for Puerto Rico.

The banking industry in Puerto Rico has enjoyed record profitability and relatively low to none failure rates in recent years. This scenario contrasted with the 1980’s when turbulent economic conditions, the crisis in the savings and loan industry, and a highly volatile interest rate environment placed the banking industry both in the US and in PR under severe stress. More recently, the banking sector in PR has suffered a death of a thousand cuts. Will this sector heal from its main wounds: the living and dynamic yield curve and the ongoing economic downturn in the island? What does an inverted yield curve suggest for the future of this economy? Find out how movements in short and long term rates are affecting local banks’ performance in Puerto Rico.

They never cease from changing culture. Facing retirement, the baby boomer generation will not just cause the over-sixty population to increase dramatically, but will change what it means to be elderly. With a higher education level, major income and mostly women, the demographics of elderly are also changing. Nonetheless, according to different worldwide surveys more than the 60% of the baby boomer generation have no plans to meet their retirement care needs. Is the island prepared to meet the needs of this population? Are there enough housing options for the elderly? Is there an opportunity to create a healthy new industry in the island?  Find out some answers in this issue of Economic Pulse.

Puerto Ricans cannot live without the beloved automobile. Every day, nearly two million cars storm highways in Puerto Rico. Since 1995, annual car sales have surpassed 100,000 units. As if this were not enough, the industry hit two back to back records in 2004 and 2005. However, an industry that was enjoying its greatest boom ever is also feeling the adverse winds beating Puerto Rico. Car sales have dropped this year by nearly 12% compared to last year. With an uncertain economic landscape and some taxes around the corner, the worst may be yet to come. Find out how the current situation may alter perspectives for the car market in Puerto Rico in the coming months.

The outstanding growth of tourism has turned this industry into one of the most dynamic economic forces around the world. Modern tourism features a clear upward trend, backed by millions of people traveling throughout the world. A vast and novel array of tourist services and increasing competition among destinations lure more and more tourists every year and fuel the development of this sector. In addition, tourism has become an engine of growth and an important source of jobs in some developing countries. This issue reviews the amazing performance of tourism over the past years. We also analyze the current situation of this industry in Puerto Rico, its opportunities as well as the challenges ahead.

If you think China, India, and other emerging economies are the new engines of the world economy, you are wrong. Women are now the largest force behind economic growth across the globe. More and more women are joining the labor force, and making a substantial contribution in many fields. High achievements in education, democracy, and other favorable changes have led women to play a key role as executives, professionals, technicians, and even in the political stage. This issue reviews some of the highlights of this worldwide evolution, that pundits have named womenomics. We will also assess the role of women in the Puerto Rican society and review one of the most controversial issues in Puerto Rico: the labor market.

Rarely had the prestigious British publication, The Economist, taken time to look into Puerto Rico’s economy. This time, it focused on several aspects of which Puerto Ricans are certainly not very proud. Lower levels of employment than in the states and high levels of public aid and welfare enrollment are undeniable. However, once the poorhouse of the Caribbean, Puerto Rico became the shining star of this area. Fifty years ago, the island underwent a quiet revolution and has become a world-class center for pharmaceutical production. Yet, this side of the story was not told. Find out other facts The Economist failed to fairly expose regarding Puerto Rico.