Ahead: Economists don’t expect significant growth in ’13
José J. Villamil, president Estudios Técnicos:
Late last year, Villamil predicted that the island’s economy will grow conservatively at a rate of 0.2 percent in 2013 and any future recovery will be “L”-shaped, which means Puerto Rico’s economy “will reach bottom and remain there for a long time. The horizontal leg will be fairly long.”
Regardless of whether real GNP growth in fiscal 2013 is slightly above “0” or slightly below, it “doesn’t matter very much in terms of economic improvement, [however] the economy will be in better shape in 2013 than it was in the previous three fiscal years.”
“Any growth below 3.0/4/0 percent is cause for concern and reflects in our case a seriously underperforming economy, with little hope of being able to deal with, for example, the unemployment problem,” he concluded.
Vicente Feliciano, president Advanced Business Consulting Inc.
Meanwhile, Feliciano strongly disagreed with the concept that the economy is in an “L” shape recovery.
“It is in contraction. It is not in positive territory with a 0.2 percent growth projection. The growth projection is still undefined but clearly negative,” he said
When looking at the picture in terms of quarters, Puerto Rico’s economy appears to have entered into a “double dip recession,” he added.
During the first three quarters of 2012, Puerto Rico’s Economic Activity Index reflected consecutive drops, leading Feliciano and his firm to the grim conclusion that could extend well into this new year.
Heidie Calero, president of H. Calero Consulting Group Inc.:
Saying the expectation is that Puerto Rico’s leaders will place their full focus on Puerto Rico’s economic recovery, Calero’s firm has forecast 1.0 percent real growth with a pessimistic scenario of 0.5 percent in 2013.
“Full economic recovery will take time, vision, planning, and execution. Not all of these ingredients are always present,” she said. “Things become more speculative in FY 2014 since by then, the government ought to have submitted a reasonable and credible multi-year economic and financial plan, not only to the bond rating agencies but also to local and external investors and the business community.”
“We need to reestablish confidence and direction for this economy. The U.S. is on the verge of a fiscal cliff by January 2013, with significant tax increases and spending cuts, which will impact Puerto Rico negatively,” she said.
The firm is banking on efforts to jump-start several economic sectors in services and agriculture, instead of the “alleged fiscal discipline” of the outgoing administration, “which raised public debt to levels never seen before and which did not translate into economic growth in Puerto Rico,” she said.
“Because of this, public indebtedness and dismissal of public employees reinforced the recessionary cycle in the island. Let this be a lesson for the incoming administration,” she concluded.