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PRMA’s ‘Econews’ Forecasts Gloomy Perspective For Puerto Rico’s Economic Growth In 2005

Petroleum costs and slow labor market hold back economic development


November 4, 2004
Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.

Escalating oil prices and slow labor market growth don’t bode well for Puerto Rico’s growth perspective for fiscal year (FY) 2005, according to "Econews," the Puerto Rico Manufacturers Association’s (PRMA) quarterly publication.

"The island’s economic growth during FY 2005 will be influenced by the effects of the price of petroleum in the short term," states "Econews." "A reduction in local production due to [high] petroleum prices will reduce the economy’s income levels, consumer spending in goods and services, and lastly, any growth perspective in the short and midterm.

"There has been an increase in short-term interest rates but it has been gradual and a negative effect isn’t expected in the construction industry," states "Econews." "At the same time, a moderate rise in employment is expected to improve per capita household income, promote consumer spending, and strengthen the retail sector. Public-works spending for the next two years will also be instrumental in how vigorous economic activity on the island turns out to be."

According to "Econews," in 2004, job creation increased 1.9% to 14,000 from FY 2003, primarily in the construction (up 7.8%) and service (up 3.9%) sectors. Unemployment decreased from 12.3% in FY 2003 to 11.4% in FY 2004. Construction permits still lead economic growth with a 6.5% increase in FY 2004 compared with a -2.5% reduction in FY 2003. In 2004, public-works investment decreased as permits were approved. There was a 10.3% increase in the value of permits registered in FY 2004 compared with 89.4% increase in FY 2003. In the retail sector, sales during FY 2004 increased 6.6%, with the highest growth in supermarket sales (12.2%) and furniture stores (12.5%).

This Caribbean Business article appears courtesy of Casiano Communications.
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