Puerto Rico’s current situation, albeit unfortunate, will bring more opportunities “find niches of economic growth and development” in the medium and longer term. But in the near-term, the island will continue to drag economic challenges present before the COVID-19 emergency.
So predicts H. Calero Consulting Group Inc. in its latest edition of its in-house “Economic Pulse” analysis, in which stated that the niches will have to do with productivity growth, a realignment of the office market and IT and web-based developments.
“In the near term, Puerto Rico’s fundamental economic challenges, unresolved since long before COVID-19, will remain with us. We need to fix them now so as to make the most of the future emerging trends that unavoidably will appear after the current lockdown,” according to the report.
The COVID-19 pandemic is the third major disruptive event to hit Puerto Rico in the last three years, starting with the catastrophic Hurricane María (2017) and the earthquakes and subsequent aftershocks occurring since late December.
But the government’s strategy to contain the spread of the deadly virus by ordering an islandwide lockdown and curfew that began Mar. 15 and is in effect through April 12, could not have come at a worst time, the firm said.
“In the middle of ongoing debt renegotiations, a yet-to-be implemented debt adjustment plan, and an economy that was headed for negative growth in 2021 prior to the current crisis,” the firm stated, of the crisis it described as “imported.”
While the local government has improved an emergency package to aid businesses and individuals that adds up to about $1 billion, H. Calero Consulting said the “measures will only cover the emergency phase with long-term effects not yet addressed.”
H. Calero Consulting countered the Financial Oversight and Management Board for Puerto Rico’s forecasts of economic growth of 1.5% in Fiscal 2020, by saying that negative impact to the island’s service, leisure, and hospitality sectors and the acceptance of remote work by other sectors would suggest a U-shaped recession — typically longer than other downturns.
The firm predicted a recycling of office space for new purposes, re-designed homes to accommodate offices, and more profitable tech startups as demand for web-based services spike.