Economic Forecast

Mar 2017: Sink or Swim Puerto Rico

Analysis of PR’s performance in 2016 & forecast for 2017 – 2019
Today, after 11 years of economic recession, external and internal events pose further challenges to the Puerto Rico economy. China’s deceleration, the exit of UK from the European Community, Trumps’ election in the US, and terrorist attacks in 2016 do not augur strong external demand for PR’s exports in coming years. The establishment of the Financial Oversight and Management Board (FOMB), a euphemism for a control board, in PR was the most important event in 2016, together with the election of Governor Rossello. In a time of uncertainty, peering 3 years into the future may seem a daunting task. It is, but, ignoring trends—demographic, economic, corporate—is not an option. Understanding the immediate future in PR is vital in ensuring that business and hopefully, government strategies are sustainable, that opportunities are identified, and that challenges are addressed to exit stagnation. This Pulse explores recent economic events in 2016 and forecasts 2017 thru 2019.

Puerto Rico Compass ©

1Q-2017 Leading Us into a Disaster?

Analysis of Puerto Rico’s Q1-2017 Economic Indices

The PR Oversight Board started to put pressure on the PR government. It is in search of results related to savings, cuts, and efficiencies in the PR government. The Administration has both hands full dealing with budget, reports, and measures with deadlines imposed by the Board. Perhaps for this reason, it seems the PR government has not engaged in a proactive role to restore growth. Instead, it appears Governor Rosselló and all the heads of agencies and public corporations are reacting to the Board’s increasing requirements. Whatever the magnitude of the measures, i.e. $120 mn or more than $500 mn cuts to the UPR budget, it is clear those are recessionary fiscal policies. The external sector, specially oil prices and interest rates, is changing rapidly, heading to a more challenging environment. This issue analyzes some risks in the future and why the Board and the PR government should take bold actions to spur growth instead of following an accountant approach to reach the Fiscal Plan targets.