Puerto Rico is expected to “be hit harder” by the effects of the COVID-19 pandemic in comparison to many other global jurisdictions, mainly due to the exceptional circumstances it faced prior to the health crisis, according to the latest analysis released by Estudios Técnicos.
The firm, based in San Juan, predicts as a result, Puerto Rico will feel the effects of the economic losses associated with the COVID-19 pandemic — estimated at some $10.8 billion — well into the year 2023.
In the years and months leading up to the total government-ordered shutdown in March to contain the spread of the virus, Puerto Rico had been dealing with the aftermath of deadly Hurricane María in 2017 and the earthquakes that rattled the island earlier this year.
All of that combined will lead to “negative growth in fiscal 2020, in view of the latest indicators, as well as losing a significant portion of output in the last quarter of fiscal 2020,” the firm’s analysis concluded.
Significant stimulus spending as well as continuation of the recovery process is expected to absorb most of the remaining COVID-19 impact in fiscal 2021, resulting in modest growth of 1.7%, the firm said.
Boosts in construction investment, as well as the disappearance of the coronavirus shock, are expected to reflect in significant growth for fiscal years 2022 and 2023. In its analysis, the firm predicts that the effects of the coronavirus on Puerto Rico’s economy will be evident through December 2020.
But, Estudios Técnicos said growth will pick up in 2022 and 2023, led by an increase in investment in construction, as the greater disbursements of federal CDBG-DR recovery funds occur, and an improvement in the labor market is expected.
“We still assume that salaried employment will not achieve pre-COVID-19 levels of February 2020 until the first semester of 2021,” the study revealed.
The firm also predicted a surge in bankruptcies and home foreclosures during the second half of this year and first half of calendar 2021. All of those predictions also hinge on whether additional natural phenomena strike Puerto Rico again, affecting the results of Fiscal 2021 and 2022.