Q2 2012: Why what we are doing isn’t working?

The financial crisis and associated recession originated in the US in early 2008 and its subsequent spread to Europe engulfed most of the economies in both the developed as well as the developing world. US and Europe still experience problems of high unemployment and slow economic growth. In July, the International Monetary Fund lowered its 2012 US real growth estimate to 2% from April’s 2.1%. How does this impact our economy? Puerto Rico is a regional economy of the US. Despite current public policies of fiscal austerity, increased public debt, and efforts to privatize major infrastructure facilities, the reality remains that Puerto Rico is highly integrated with the US economy (71% of PR’s exports got to the US). Without structural changes, Puerto Rico will continue to suffer the effects not only of a slow US growing economy but also of an internally slow growing economy. This issue focuses on the impact of external factors and current policies on a very open economy such as ours.