Puerto Rico’s economy will take a $4.8B hit from COVID-19 this year
Puerto Rico’s economy will experience a net direct impact of some $4.8 billion through the end of 2020 as a result of the measures taken to fight the spread of the COVID-19 virus — which could have been as high as $8.2 billion, had the blow not been softened by local and federal relief packages.
The prediction by economic analysis firm Estudios Técnicos Inc. reflects the negative effects of the ongoing lockdown offset by some $3.5 billion in federal funds assigned to Puerto Rico to help individuals and businesses deal with the aftermath.
On Mar. 26, Estudios Técnicos published a preliminary estimate of the impact on economic output caused by measures taken to contain the virus, putting it at between $2.7 billion and $5.8 billion for the remainder of 2020.
“Federal funding at the time was still not set and no provision was made for the impact of such funds. In uncertain times it’s clear that any estimates will be subject to changes as events develop and new and better information is made available,” the firm stated in an updated estimate released Tuesday.
“This is why Estudios Técnicos updated the results by adding the new lockdown and including the overall impact of federal funds. The information on the latter comes from different sources,” the firm stated.
In the new report, Estudios Técnicos identified the manufacturing sector as the most affected, with a $4.3 billion drop in production. Other sectors with predicted drops are: real estate and rental and leasing ($406.2 million), the healthcare sector due to a decline in hospital occupancy ($222 million) and another $685 million in direct hits to ambulatory health care services (doctor’s offices, dentists, etc.); finance and insurance ($320.8 million), and accommodation and food services ($787.9 million).
The total impact was pegged at $8.3 billion, minus $3.5 billion in federal assistance, putting the estimated net direct impact for the remainder of the year at $4.8 billion, according to the firm.
“There will be further updates as the COVID-19 issue develops. What must be understood is that, as extensive research shows, the impacts of a pandemic can last for years,” the analysis firm stated.
“It is also clear that early social distance measures such as those initiated in Puerto Rico can shorten the impact period and improve results, particularly if accompanied by extensive testing of the population,” it added.