Estudios Técnicos predicts better economic outlook during 2nd half of ’21
In a recent overview of Puerto Rico’s economic panorama, analysis firm Estudios Técnicos predicted that fiscal conditions on the island could improve during the latter half of this year.
In the research, the firm acknowledged that Puerto Rico’s economy continues to experience declines, but external factors such as the distribution of the COVID-19 vaccine, the Coronavirus Aid, Relief, and Economic Security (CARES) Act disbursements, and the Hurricane María reconstruction funds, among others, will help mitigate the current downfall and improve the economic outlook for the medium-term.
On April 22, 2020, the government of Puerto Rico announced it received more than $2.2 billion from the US Department of the Treasury as part of the CARES Act stimulus package “to assist the island with emergency expenses and mitigate the effects of the global pandemic and the subsequent economic downturn,” according to the Fiscal Agency and Financial Advisory Authority (AAFAF, in Spanish).
At the time, former Gov. Wanda Vázquez outlined a series of initiatives to provide funding to self-employed individuals, emergency assistance to small- and medium-sized businesses for operational disruptions, and hazard payments to first responders and health professionals.
“Currently, Estudios Técnicos forecasts a scenario where Puerto Rico’s GNP reflects a contraction of 4.4% in 2020 along with an estimated contraction of 0.9% in 2021. In a scenario where vaccines are properly administered in the first half of 2021, it is expected that the second half of the year reflects better performance than the first, all other things being equal,” the firm stated.
Other factors that will influence the economy in coming months include how the virus is contained, the performance of the US economy, the new composition of the Financial Oversight and Management Board for Puerto Rico, progress made on replacing the 4% tax on foreign corporations under Law 154, and, most significant, approval of the new federal stimulus funds, the firm noted.
In its analysis, Estudios Técnicos credited Gov. Pedro Pierluisi’s administration for appointing individuals with experience in positions that directly impact the economy, in particular, the Treasury Department, the Department of Economic Development, and the Central Office of Recovery, Reconstruction and Resiliency (COR3, in Spanish).
“These appointments could accelerate the disbursements of the post-Maria reconstruction funds,” it said, noting that only 13% of the $1.5 billion allocation of Community Development Block Grant (CDBG-DR) Program funds allocated by the US Department of Housing and Urban Development has been disbursed.