Puerto Rico Compass ©

Q3 2007: Are We Still in the Eye of the Storm?

The signs of storm in the indices of the last quarter were true. The six HCCG economic indices for 3rdQ of 2007 show the worst performance since the 3rd Q of 2001. The causes are both, external and internal. Among the external factors are the US economic slowdown, weakening of the manufacturing sector, financial market turbulence, specially in the subprime lending sector, and escalating energy prices. Internal factors include recession in the island’s construction and manufacturing sectors, delays in extension of the Incentives Law, and the loss of confidence of the Puerto Rican consumer. Find out what factors could return Puerto Rico to economic recovery and growth.

Puerto Rico Economic Pulse ©

September 2007: Is Puerto Rico Overbanked?

An outlook of the local banking industry

From 1992-2005, Puerto Rico’s banking industry enjoyed historical growth rates thanks to favorable economic conditions and low interest rates. For the past two years, the banking industry has faced an economic deceleration, an inverted yield curve, and a credit crunch. All these factors are forcing banks to look for ways to increase efficiencies in order to maintain profitable operations. Many argue that an overdue industry consolidation is necessary to reach those efficiencies. During the past 15 years, the industry consolidated from 22 institutions in 1992 to 10 in 2007. Given this trend, is Puerto Rico still overbanked?