Federal recovery funds to boost Puerto Rico growth to 4.2% in 2020
SAN JUAN – The release of $1.5 billion in Community Development Block Grant – Disaster Recovery (CDBG – DR) Program funds following Hurricane Maria will boost Puerto Rico’s economy, which should grow 4.2 percent for fiscal year 2020 and remain in positive territory until 2022, according to new estimates by economic research and consulting firm Estudios Técnicos Inc.
“According to the Consolidated Plan of this federal program, about $1 billion of these funds will be destined to the construction and restoration of housing, so we expect that, by the second half of the year, an increase in housing construction investment will be seen, and with it, an increase in cement sales, as well as in construction employment. We also expect increases in the retail sale of construction materials and home supplies,” Estudios Técnicos President Graham Castillo said in a statement.
Castillo indicated that the arrival of these funds gives greater certainty to his firm’s revised economic projections, which point toward an increase in economic activity of 4.2 percent in fiscal 2020 and 2.1 percent in 2021, with a 20.2 percent and 15.2 percent rise in investments those years, respectively.
The positive impact of the federal recovery funds would run through 2022 when it is estimated that growth would be 1.7 percent. For current fiscal 2019, Puerto Rico’s economic growth will be 3.1 percent, according to the firm’s revised estimates.
“We hope that the release of an additional $8 billion will be announced soon, which will improve the economic activity on the Island and the social conditions of low and moderate income people with housing needs resulting from Hurricane Maria. A particularly needy group is the elderly population,” Castillo said.
Castillo emphasized the need for a plan for sustained economic development that incorporates innovative projects in areas of opportunity for Puerto Rico. Estudios Técnicos estimates that among the sectors that are most likely to contribute to the economy are manufacturing; advanced services including technology and health and financial services; as well as agriculture and tourism.