Puerto Rico’s road to economic recovery is feasible, but remains a long one and depends entirely on the government’s commitment to lowering electricity costs, stabilizing fiscal revenue, reverting net outward migration, and increasing private investment, H. Calero Consulting Group Inc. expressed in the latest edition of “Compass,” its quarterly publication.
In its analysis of Puerto Rico’s economic activity third quarter results, the firm noted that five out of the six economic indices fell, but three were less negative than in the second quarter, which could “signal the start of a badly needed upward trend.”
The indicators performed as follows: construction plunged 17.3 percent, compared to a revised 22.7 percent in the second quarter; the coincident index fell 3.8 percent in the third quarter compared to a 6.5 percent drop in the prior quarter; manufacturing was down 4.4 percent, an improvement from the 7.3 percent drop reported for the second quarter; the leading index, which signals the path of the economy for the next three months, was down 3.6 percent; and the consumption index experienced a 2.8 percent decline, which was worse than the 1.3 percent reported for the second quarter. Banking, meanwhile, remained unchanged with 0 percent growth in the second quarter of 2013, with index components showing mixed results.
“Although it still has a long way to go, the current administration, only 10 months old, has demonstrated its commitment to action toward economic growth and development,” the firm said in its assessment. “An analysis of six indices for the third quarter of this year highlights several moves in the right direction.”
The government has so far admitted that Puerto Rico is experiencing “the most important period of fiscal and economic rebuilding in recent history but made it very clear this administration is committed to reducing and ultimately eliminating its reliance on deficit financing; transforming key public corporations from a long history of state subsidies to self-sustained enterprises; and strengthening the liquidity of the Government Development Bank,” the consulting firm noted.
The publication placed emphasis on recently announced investment projects in tourism, manufacturing, real estate, and infrastructure as positives to move the economy forward. Still, it noted that pressures such as oil prices and rising unemployment, can hinder growth.
“The road ahead is long but with a commitment to action and participation of all economic sectors, Puerto Rico can overcome the recession,” H. Calero Consulting said in its analysis.