Puerto Rican businesses, consumers ‘optimistic’ on economic recovery post COVID-19
The word “optimism” was repeated a number of times during the Puerto Rico Chamber of Commerce’s presentation of the 2021 studies establishing the level of confidence by local entrepreneurs and consumers.
In both cases, the research concluded that there are high expectations for improved economic conditions moving forward.
While economic analysis firm Estudios Técnicos prepared the entrepreneur survey, Nielsen Puerto Rico was commissioned to carry out the consumer confidence survey.
Although 80.8% of Puerto Rican entrepreneurs surveyed by Estudios Técnicos Inc. assure that the island is in recession, they are already beginning to show moderate signs of recovery such as the expectation of hiring employees, expanding operations and increasing sales.
“The Confidence Index of the Puerto Rican Entrepreneur has improved in 2021 to reach 56.5 compared to 47.7 in 2020. Likewise, the confidence expectations of entrepreneurs this year are at 69.3, an increase from 59.9 last year,” said José Joaquín Villamil, CEO of Estudios Técnicos, when presenting the results of the study.
“They are positive signs in the minds of entrepreneurs that perhaps reflect light at the end of the tunnel after all the negative impact of the COVID-19 pandemic,” he said.
The impact of COVID-19 is notable in the survey, as 16.2% of those surveyed said they have had to close or stop operations in the last six months, for an average of 131 days. Even so, this is a lower figure than the 43.3% that had to close in 2020.
Another fact is that half of the people consulted, 50.8%, mentioned that a member of their company had contracted COVID-19. In 2020, that number of infections had been lower, at 28.7%.
For the survey, Estudios Técnicos had 130 companies participating, 96.9% of them being Puerto Rico-based. The survey was completed between February and April 2021. The Puerto Rico Chamber of Commerce has commissioned the firm for this study since 2019.
In general, the business sector shows greater confidence that the island’s economic situation will be better (39.2%) or will remain the same (46.2%) and only 14.6% think it will be worse. This contrasts with what they thought in 2020 in the midst of a pandemic when fewer entrepreneurs (23.3%) perceived that the economy was going to improve or remain the same (34.7%). 38.7% believed last year that the economic situation was going to get worse.
When compared to the responses offered in the consumer confidence survey, 28% of the participants said the economic scenario in 2021 is worse than the prior year. That result is 7 percentage points below the 35% reported last year, supporting the seeming positivity that’s gaining ground.
That index, prepared by Nielsen, polled 500 participants from Mar. 16 to April 7, 2021. This was the second round of questions, following a November 2020 exercise, said Tatiana Irizarry, commercial director of Nielsen Puerto Rico.
Out of a possible score of 200 points, Puerto Rican consumers gave an 86 to their level of confidence in the economy. This was four points higher than the 82 given in November, she said.
“This is very similar to the increase reflected in the entrepreneurial index. It has to do with the confidence in the measures being taken to fight COVID-19, especially vaccination,” Irizarry said during her presentation.
The consumer index also revealed that there was a slight growth in the positive perspective related to the island’s labor market and whether it is time to go shopping, versus the November results.
Eduardo Burgos, COO of analysis firm Abexus Analytics confirmed the parallelisms in the results of both studies, which for example, coincided in the expectation of increased sales.
While 63.8% of entrepreneurs expect growth, 32% of consumers believe “it’s a good or excellent time to go out and buy the things they want and need,” Burgos said.
“Both groups coincide that the economic situation is fragile. However, there was an improvement in that perspective when compared to 2020,” he said. “There’s an improved perception about future economic conditions, with entrepreneurs expressing more optimism when compared to 2020.”
Taking the good with the bad
While more than half of the surveyed companies said they expect to expand operations and employee base in the next six months, the index also confirmed the challenges they face.
Among the major problems for companies with more than 20 employees are the shortage of workforce over an inability to recruit employees (50%), energy costs (49%) and the tax burden (47%). Companies with fewer than 20 employees said their challenges are the economic situation (54%); government bureaucracy (44%) and the tax burden (46%). Other problems noted were restrictions due to the pandemic, insufficient demand, and a shortage of materials and equipment.