Prepared the island for economic stagnation | finance

As economic challenges continue to mount, the threat of the United States entering a recession continues, and uncertainty grows about the financial consequences it could generate in the country.

However, economists have previously consulted speaker keep it Puerto Rico is ready to face the economic slowdown This is approaching in the American nation without serious consequences.

according to him Economist Adrian AllosAnd the The island is in a better position compared to the economic stability it enjoyed before the COVID-19 pandemic and before Hurricane Maria in 2017. He understands that this is in large part due to the millions of federal funds allocated to rebuilding the country, and he has labeled it a “savior” for the coming years.

“We now understand that the island is better prepared or in a better position than it was before the hurricane or even before the pandemic to face the economic recession. The amount of money that has been allocated to us and that is expected to be disbursed in three to five years will give Puerto Rico a kind of lifeline life “.

Regarding the impact on consumers, the economist explained that the outlook becomes uncertain, as it depends on how affected the United States is. However, expect Banks will limit the availability of credit to customers, when applying for cards, personal loans, and mortgages.

There will be an impact on their finances, no doubt about it. Looking back from 2008 – when the recession hit – credit was not readily available. At the time it was hard to get mortgages, credit cards and auto loans, because when we enter a period of economic downturn, the banks tend to put up with them and not continue to lend money.

Increases the use of credit cards on the island

. added Other economic sectors that will be affected will be tourism and business related to the export of goods and services to the United States, Especially in the field of retail sales.

according to Economist Martha QuinonesAnd the Puerto Rico is ready for the beginning of the recession in the United Statesbecause the effect will not be immediate, but long-term.

“Yes, it is ready, because we will not feel it right away,” said Quinones, after arguing that people would not stop consuming until their ability to pay was affected.

He added, “People will continue to get credit, because people in Puerto Rico don’t understand the indicators, and that’s why the bank is happy, because they know they won’t be affected. In the long run, we’ll be able to see it because people will feel how the value of the promissory note that they have to offer in the future will go up.” their real estate loans.

They expect poverty to increase in the country

He agreed that one aspect that would become more expensive was credit, and noted that it could “affect other lines, such as the ability of an investor to obtain a loan and make some type of investment such as building or purchasing goods.”

Urging the government

The economist urged the government to take measures to ensure the ability of consumers to buy food and to educate the population about the economic reality that the country may face.

“In fact, they have already rolled up our sleeves so much that we have no sleeves left to continue to roll up. It is the government that has a responsibility to help people understand what is happening and look for alternatives so that people can buy their own food,” he said.

The island's informal economy remains strong

Although the “lifeline” of federal funds is expected to last for some time, Economist Jose Alameda He warned that they will only mitigate the impact of the recession if the government is serious about spending the money.

“What the bankers are saying is that there is a great mattress and that Puerto Rico can throw itself on its chest with that mattress and nothing will happen, that depends. If all of that is invested in infrastructure, that investment should reduce, somewhat, for Puerto Ricans from The impact of the recession in the United States.

Federal or state funding

According to data from Central Office for Recovery, Reconstruction and Resilience (COR3) There is a total of approx $80 billion in federal funds allocated, of which only $24 billion was invested, the equivalent of 30%.

According to the information provided by Alameda, In the latest estimate for the US quarter, the economy shrank slightly by 0.2%.

He stressed that “this is not a significant decline, but this is the second quarter and as a rule we can already talk about the United States which is experiencing stagflation, a recessive economy with inflation.”

The complexity of the impact of the island-based economic dichotomy

Although it is too early to determine the impact of stagflation on the US economy, the economist noted that retail sales and manufacturing services will mostly be affected, and there will be higher prices and more expensive financing.

The most recent recession in the United States was relatively short — from March to November 2003 — and moderate in terms of lost production, according to the US government’s Bureau of Economic Analysis.

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