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 estimate.
“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.