Economic impact of COVID-19 virus in Puerto Rico revised upward
The direct impact of the COVID-19 emergency on Puerto Rico’s economy has been revised upward to $9.7 billion, from an initial $6.9 billion, economic analysis firm Estudios Técnicos revealed.
The 40.5% increase responds to an update of the parameters associated with the lockdown period and the month-equivalent magnitude of the initial impacts, the firm said.
However, the influx of local and federal aid packages has kept the negative impact at bay, the firm said. The impact estimates are as of May 2020.
“The new measures outlined in the economic stimulus package were included as part of the influx of funds. This represented a 50.3% increase with respect to the last update of a month ago,” the firm revealed in a report. “Even though the funding increased by more than 50%, the total economic impact of the additional lockdown periods is greater than the expected benefits from additional funding.”
“It is also true that federal funds do not necessarily impact the same individuals and firms that have suffered a negative impact. Thus, the gross impact and its distribution provides a better measure of impact as opposed to the net impact,” the firm added.
Estudios Técnicos also mentioned that of the 300,000 jobs lost since mid-March — when Gov. Wanda Vázquez mandated the lockdown and curfew to contain the spread of the COVID-19 virus — the probability is that some 100,000 jobs will be lost permanently.
“The jobs that have the highest risk of being lost are precisely those that are more susceptible of being substituted by technology,” said the firm, such as educational and healthcare services, public administration, and information as high-risk jobs.
Another impact difficult to gauge at this time is on the structure of specific markets, Estudios Técnicos said.
“It’s clear that many small and medium size businesses will be lost permanently and that the retail market will have a very different and more concentrated structure than before. Although the trend in that direction was already well established, COVID will almost certainly accelerate it. This is not unique to Puerto Rico,” the research firm noted.
Estudios Técnicos said estimating impacts for COVID is a very different process than doing so for a hurricane, since the virus can have extended impacts while a hurricane is a one day event and is localized.
“COVID is a global phenomenon that is now entering its sixth month. What this means is that impact estimates will change over time, while in the hurricane one had a fairly clear idea of impacts a few days after the event. This is why periodic updates are necessary to gauge the impacts of COVID-19,” the firm added.