Puerto Rico Compass ©

Q1 2009: Tracking Puerto Rico’s Economic Scorecard

Quarterly economic indices tell the story

During the first quarter of 2009, the newly elected government announced huge fiscal deficits and an urgent need to reduce public expenses. Federal and local stimulus plans were approved with the hope of restoring growth in the short run. The administration announced a reduction of 30,000 jobs starting in fiscal 2010. This measure is recessionary and will worsen unemployment, which reached 14.1% during February. How long will the recession last? This will depend on the effectiveness of the recovery plans and on what sectors investment flows while at the same time, consumers recover confidence on the island’s economic future. How the US economy performs, as well as local sectors, such as, construction and banking are the clue to finally register positive growth.

Puerto Rico Economic Pulse ©

March 2009: Puerto Rico’s Economy in a Balancing Act

Performance of the PR and US economies in fiscal 2008 and forecasts to 2011

An era of fiscal deficits and oversized government may be ending but how long will it take the PR economy to regain healthy growth without the help of the US? With the world economy in its worst crisis in 70 years, every country needs to do its bit to rekindle global demand. President Barack Obama and his economic team are already racing against the clock to try and fix the US economy with trillion-dollar programs. The forecast for the US economy is recession in fiscal 2009 and 2010. Locally, Governor Fortuño is implementing a $500 million Criollo Plan, but trying to eliminate a $3.2 billion deficit in the short term may deepen the island’s recession. Under these conditions, PR’s recovery is like running into a 40-mile-an-hour headwind. Hard choices are still ahead.