Hurricanes Irma and María — which clobbered Puerto Rico back-to-back in September — revealed the island’s broken infrastructure, but created a second chance to rebuild, an analysis by economic research firm H. Calero Consulting concluded.
But to succeed at this, the Puerto Rico government and the Financial Oversight and Management Board for Puerto Rico “reflect, plan, and build the infrastructure the island requires to thrive.”
As per figures made public in recent weeks, the unprecendented damages caused by the storms is estimated at between $95 billion and $115 billion. The hurricanes dealt mortal blows to Puerto Rico’s power grid, hundreds of roads and bridges, maritime ports and airports, buildings, housing and the telecommunications network, among others.
“All economic sectors depend on infrastructure to thrive; some sectors rely more than others but a good and consistent infrastructure is a must to be competitive in this global economy,” the H. Calero Consulting’s most recent issue of its “Compass” publication noted.
“Hurricanes Irma and Maria demonstrated that much of Puerto Rico’s alleged robust infrastructure was only a house of cards and when the winds blew out the electrical grid, all the house collapsed,” the report concluded.
As a result of the deadly storms, Puerto Rico’s major economic indices fell during the third quarter of the year, with the Coincident Index (which includes employment, payroll, cement sales and tourism activity) and Construction indicators losing the most at -7.2 percent and -19 percent, respectively.
The consumer index fell -0.4 percent, manufacturing (-4.3 percent,) banking (-4.1 percent) and the Leading index (-1.1 percent,) the report concluded.
Meanwhile, the firm noted that Puerto Rico’s slow recovery after the storms — especially regarding the power grid — creates an ever-growing risk of families leaving the island and businesses closing or going bankrupt. Retail and manufacturing, the report noted, experienced the biggest blows.
“The first step to fix a broken infrastructure is to prepare an assessment quantifying the damage and estimate its recovery costs,” H. Calero Consulting noted.
“However, two months after María, neither the government nor the Puerto Rico Electric Power Authority have submitted such an assessment and they continue signing onerous contracts without knowing how they fit into the broader picture,” according to the report.
“The road ahead is steep, but with a commitment to action, carefully planning, transparency, mutual aid, and participation of all economic agents, fixing Puerto Rico’s infrastructure is possible,” the firm predicted.
However, the extensive damage in infrastructure and the slow reconstruction process are important factors that prevent the economic agents to have a better expectation about the future, the firm noted.