Puerto Rico’s policymakers must focus on two crucial issues to steer the island back on the road to economic recovery — preparing for the trade war between the United States and China, and executing an economic plan to rescue the island from being left behind.
The latest issue of “Compass,” a publication by H. Calero Consulting firm, shows that although Puerto Rico may be showing signs of growth after Hurricane María’s devastation last year, many of the gains could be the result of comparing them to a “devastatingly poor” third quarter of 2017.
Federal disaster funding has lifted the economy, injecting growth into several sectors during the third quarter of 2018: Construction (41.5 percent) and consumption (40.2 percent). The Coincident index showed a 4.3 percent growth.
The banking sector posted its best performance yet in 4.3 percent in terms of net income, and while unemployment is at its lowest since the 1990s, not many sectors posted job gains.
“Even more intriguing are the results posted by the Department of Labor’s Establishment Survey, where employment by sector does not yet reveal a true economic recovery. [Third quarter 2018] job gains compared to last year depicts a significant loss of 7,630 jobs in services, followed by government with 6,570 fewer jobs, and trade lost 1,570 jobs,” the firm noted.
“The short-term outlook points to a Leading index growing a meager 1.5 percent. Hence, there are still many hurdles to overcome and claim sustainable growth over the next three to six months,” according to the publication.
Furthermore, the firm noted that another area to monitor is manufacturing, whose players are experiencing intense competition from Chinese rivals.
“Today, China is at the global frontier of new technology in everything from mobile payments to driverless cars. Puerto Rico cannot afford to be left behind. It requires a vision of the future,” the firm stated. “Competition from China is formidable, and we have not seen the full effects of a trade war between the United States and China.”
President Donald Trump’s administration’s ongoing trade war “continues to be a dark cloud as well as his most recent and shared perception that Puerto Rico is using federal disaster monies to pay public and other debt.”
Big companies demand a “large, skilled workforce, city amenities, and transportation. [President Donald] Trump’s negative perception of Puerto Rico, or worse — our local use of federal disaster monies — adds to the island’s perils. We need policymakers to focus on these issues.”