The release of $1.5 billion in post-Hurricane María CDBG-DR reconstruction funds will spur a positive momentum in Puerto Rico’s economy, which should grow by 4.2 percent in fiscal year 2020, and will remain positive until 2022, according to new estimates by Estudios Técnicos Inc.
“This week the [U.S.] Department
of Housing announced the release of the first $1.5 billion in CDBG-DR funds,” said
Graham Castillo, President of research firm Estudios Técnicos Inc.
“According to this federal
program’s consolidated plan about $1 billion of these funds will be allocated
to the construction and rehabilitation of housing, and we hope we’ll see an
increase in construction investment for the second half of the year, and, an
increase in cement sales and construction jobs. We also expect increases in
retail, construction materials and household goods sales,” Castillo said.
Castillo said the arrival of
these funds gives greater certainty to Estudios Técnicos’ revised economic
projections, pointing to an increase in economic activity of 4.2 percent for
fiscal 2020 and 2.1 percent for 2021, a 20.2 percent increase in investment and
15.2 percent for the same years.
The positive impact of new
funding allocations for reconstruction will extend through 2022, when it is
estimated that growth would be 1.7 percent. In fiscal year 2019, Puerto Rico’s economic
growth will be 3.1 percent, according to Estudios Técnicos’ current revised
“We hope for an announcement
to be made soon about the release of an additional $8 billion, which will improve
the economic activity on the island and the social conditions of low- and
moderate- income housing needs resulting from Hurricane María. A particularly
needy group of the population is the older generation,” said Castillo.
Although injection in federal
funding will help to revive the economy, Castillo stressed the need for a plan
for sustained economic development, to incorporate innovative projects in areas
of opportunity for Puerto Rico.
Estudios Técnicos Inc.
estimates that among the sectors most likely to contribute to the economy are
manufacturing, advanced services — including technology, healthcare, financial
services and some others — agribusiness and tourism.