Puerto Rico Economic Pulse ©

May 2013: Can Small Lead the Way?

Why small and medium enterprises will matter more than ever

Puerto Rico’s economic landscape has always been dominated by initiatives targeting big business. In practice, every major initiative relegated small and medium enterprises (SMEs) to the backseat when it came to public policy.  This is not to say that SME-targeted resources were not available (quite the opposite) but rather that SMEs were always considered the complement to the “true” engines of economic growth. A careful look at SMEs reveals, however, a different picture. Personal consumption—typically the largest contributor to GNP growth—depends largely on the jobs generated by SMEs. Furthermore, as PR rebuilds its economic fiber, small businesses will continue to channel innovation, entrepreneurship, and small-scale investment.  Interestingly, opportunities will abound in ways that will surprise even the skeptics. This Pulse will tell you why and where.

Puerto Rico Economic Pulse ©

April 2013: Survival of PR’s Public Retirement System

Analysis and lessons to be learned

In 2011, the Center for Retirement Research at Boston College concluded the average baby boomer was financially unprepared for retirement and, as a result, had to plan to work longer. The 2008 financial crisis wiped out $11 trillion of US household wealth, including both real estate and financial assets. The recent stock market recovery trimmed that loss to about $8 trillion. Since 2004, PR has lost $18 billion of wealth, as measured by the PR Stock Index. People close to retirement age still have an enormous savings gap if they aim to keep their current lifestyles. Since Government accounts for 26% of total employment in PR, public retirees will represent an important share of all retirees. In FY 2011, the unfunded liability of the Public Retirement Systems, Central Government plus Teachers, amounted to $35.6 billion. How did we get there? What can we learn from other jurisdictions? Is recent Law 3 a solution? Find out in this Pulse.

Puerto Rico Compass ©

Q1 2013: Still, An Uphill Path Ahead

An analysis of 1st Quarter 2013 economic indices

Puerto Rico has a long way to go before it can truly be considered a post recession economy. This Compass analyzes PR’s current economic conditions compared to precession levels in Q1 2006. The island economy is still fragile. The new administration in “La Fortaleza” faces daunting challenges and tough decisions to walk the fine line between fiscal discipline and economic growth. Credit rating agencies, bondholders, and the general public want to see quick results but that is not possible when the problems have remained unsolved for many years. The local fiscal year budget is due on June 30 and the current government has to choose between restrictive fiscal policies (more taxes, less spending) or try to restore growth thru expansive measures (fewer taxes, more spending) or a reasonable combination of both.

Puerto Rico Economic Pulse ©

March 2013: The Threat of an Incredible Labyrinth

An analysis PR’s performance in 2012 and forecast

The world is in a state of turmoil that ranges from the chaos after the financial crisis to the current crisis in the Eurozone, from the Arab uprisings to tensions between North Korea and Japan. There are protests everywhere, Cyprus, Athens, Barcelona, New York, and elsewhere. The US dollar faces a real risk of losing its standing among international currency markets. Many of the familiar frameworks are collapsing while the world undergoes rapid change. Political leaders in Puerto Rico need to address local issues and people’s specific demands, but without a clear vision, such a reaction is likely to be inadequate or insufficient to reactivate the PR economy. This Pulse presents a concise outlook of external and internal factors that will define economic policy and strategic planning. HCCG also presents its macroeconomic forecast for fiscal years 2013 thru 2015.

Puerto Rico Economic Pulse ©

February 2013: Can Education Make the Difference?

An analysis of the impact of education in PR

Education is a compelling investment to succeed in today’s global markets. It is critical to achieve productivity, competitiveness, economic growth, and overall wellbeing. The US is currently debating whether subsidized, quality pre-school pays off. Given the difficult fiscal situation both in PR as well as the US, we better not be short on evidence that our education dollars will be well spent if we are to boost economic and social growth. We can buy desks, improve, and build schools but that does not necessarily guarantee outstanding students. Similarly, we have teachers but we cannot legislate excellent teachers. Improving Puerto Rico’s education system is a complex and collaborative enterprise. Some countries have achieved exceptional education systems. Who are these countries? What do these successful education systems have in common? How can education impact growth and competitiveness? How does Puerto Rico compare against performance indicators for education? This issue is about education and what the island could learn from other successful countries.

Puerto Rico Economic Pulse ©

January 2013: Farewell to the Economy in 2012

Setting the stage for what lies ahead in Puerto Rico’s economy in 2013

Worldwide, year 2012 was dangerously tough, with a threatening break-up of the euro zone and economic recession in several countries; political gridlock in the US as the fiscal cliff approached and resulted in self-induced stagnation; and Puerto Rico deep in economic depression and divisive politics. The good news is that, contrary to popular belief in the Mayan prophecy, the world did not end in 2012. However, watch out for 2013 since the economy will continue to be a worry everywhere. Puerto Rico may have reasons to fear a year with the number 13 in it but it might not be so bad after all if the new Administration finally starts implementing a cohesive vision and multi-year economic plan for the island economy; convinces bond rating agencies and investors that Puerto Rico is still a great opportunity; and then executes the plan. This issue examines the most important economic highlights of the past year and sets the stage for the economy in 2013.