Puerto Rico businesses, consumers weary of island’s economic panorama
Energy costs, persisting worker shortages and Puerto Rico’s tax load are the three main elements that affect the operations of local businesses surveyed in the most recent Puerto Rican Entrepreneur Confidence Index commissioned by the Puerto Rico Chamber of Commerce (CofC).
In the study, conducted for the trade group by economic research firm Estudios Técnicos, 52% of the 164 participating firms said energy costs are a burden, 43.2% pointed to an inability to find staff and 40.7% mentioned taxes as reasons for a lack of trust in the island’s business environment.
“Given the economic challenges that we have in 2023, which has just begun, we want to provide accurate data and information that supports strategic planning in the private sector, government sector and the general public, and that serves as an instrument for a better understanding of the commercial industry and of the consumer,” said Cameron McKenzie, president of the CofC, which also unveiled a second study measuring the trust levels of consumers.
The most recent edition of the Puerto Rican Entrepreneur Confidence Index study covers aspects such as the state of the economy after the federal funds received due to the COVID-19 pandemic, the challenges of reconstruction and projections for economic growth during 2023.
Some of the findings indicate that half of the companies have fewer than 19 employees. Although there is representation from most of the municipalities, the highest concentration is in San Juan. Half of the companies are in the services, health care and real estate sector, Estudios Técnicos Chair José J. Villamil said during the presentation.
While 93.2% of the companies consulted indicated that they fully Puerto Rico-based, 11 of those surveyed said their company has a head office in the mainland U.S. or another country and that they have one or more facilities through which they offer services on the island.
The survey among CofC members was completed through an online questionnaire from November 2022 to February 2023.
Meanwhile, the results of the Puerto Rican Consumer Confidence Index study, commissioned to NielsenIQ — which analyzed the main concerns, economic expectations and buying habits of local consumers — were also disclosed.
Some of the findings are: a drop in consumer confidence during November, when 75% of the 500 survey respondents confirmed the island’s situation will be “the same or worse” this year.
“The Chamber of Commerce has identified the need to regularly measure the degree of optimism or pessimism among Puerto Rican consumers. The Consumer Confidence Index serves as a key piece to measure our island’s financial, personal, labor and economic situation,” McKenzie said.
Puerto Rico residents continue to believe that the island is in recession. A negative view persists regarding the island’s future — 51% envision that the situation will be worse in the next six months.
Likewise, trying to save on utilities at home continues to be the most used strategy when it comes to saving on expenses, followed by reducing the budget for entertainment and the monthly purchase of food. About 84% have changed their habits to save on household expenses, the study showed. The survey polled men and women age 18 and older, between Oct. 6, 2022 and Nov. 11, 2022.
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