Puerto Rico Economic Pulse ©

May 2007: Tracking Agriculture in Puerto Rico

An overview of agricultural public policy

What is the role of agriculture within the PR economy?  What would happen if food imports were suddenly interrupted? Agriculture is central to any economy and Puerto Rico is no exception. It is more than farming since it touches jobs, animal welfare, socio-economic and environmental issues. Today’s agricultural industry is changing as a result of global awareness to the growing importance of environmental concerns and key issues such as the socio-economic development of rural communities and world hunger. World agricultural production must double to meet the needs of an estimated additional 3.5 billion people in 2050. This edition of Pulse analyzes recent developments within the international agricultural sector and explains what are the challenges and how PR is guiding its policy.

Puerto Rico Economic Pulse ©

April 2007: What Moved my Wealth?

An analysis of the mortgage industry in PR

Studies by the Federal Reserve Board have shown that an increase in housing wealth leads to an increase in long-run consumption 1.5 times greater than stock wealth increases. Homeownership in Puerto Rico is estimated at around 80% of households. Several arguments support this theory. For instance, home prices are less volatile than stock prices. Stocks are highly concentrated among high-income individuals. Finally, stocks are subject to capital gain taxes and early withdrawal penalties.  In contrast, housing wealth receives a more favorable tax treatment. Will future gains in housing wealth require a healthy mortgage banking industry and an efficient construction industry in PR? Currently the mortgage banking industry is facing tough times. In addition, the signs of a slowing construction industry and declining stock prices, raised concerns about what would be the source of household wealth for the upcoming years.

Puerto Rico Compass ©

Q1 2007: Puerto Rico Out of Balance

A review of Q1 of 2007

Although the economy remains in recession, its current wobbly condition has hindered some sectors but presented opportunities for other sectors. Yet, the lack of growth continues to hamper the island and the risk that it will spill over to all sectors, threatens equilibrium. Six economic indices, ranging from the overall performance of the economy, banking, manufacturing, construction, consumption, and a leading economic index point to an economy that struggles to stabilize during the 1st Quarter of 2007.

Puerto Rico Economic Pulse ©

March 2007: Through the Looking Glass

A review of the PR economy in fiscal 2006 and forecast for 2007 to 2009

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.

Puerto Rico Economic Pulse ©

February 2007: A Revolutionary Sales Tax in Puerto Rico

Understanding the tax and its economic impacts

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.

Puerto Rico Economic Pulse ©

January 2007: The Blossoming Isthmus

On the economic boom in Panama and lessons for Puerto Rico

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.