The study’s authors, economists Juan Lara and Vicente Feliciano of Advantage Business Consulting, are forecasting that the current fiscal year 2013 will end with negative growth.
The economists blamed the “double-dip” recession in part on the end of stimulus funding under the federal American Recovery & Reinvestment Act (ARRA), which includes a hike payments into Social Security that represents a drop in income for island workers.
However, the official outlook from the Puerto Rico government is still forecasting slim economic growth this year, albeit less than initially seen.
Last month, the government cut its economic growth estimates for fiscal 2013 nearly in half, to 0.6 percent from 1.1 percent, largely because of economic conditions outside the island. The Puerto Rico Planning Board also cut the estimated economic growth rate during fiscal 2012 (ended June 30) to 0.4 percent from 0.9 percent.
The Planning Board said the rising price of oil, fuelled by war and political uncertainty of the Middle East, was one important factor in cutting the economic growth estimate in Puerto Rico. Slowing economies in Asia and Europe are also causing global uncertainty.
The new MIDA study was divided into three parts: macroeconomic projections; an economic index for the industry based on government data; and a survey of businesses in the different sectors of the food industry.
“This study gives our members the information needed to face the economic challenges ahead in 2013,” said MIDA President Ferdysac Márquez. “It is equally important that we demand that our public officials to provide the tools to overcome these challenges.”
The study found further job losses in the food industry, showing 22,900 workers in August 2012 compared with 25,900 during the same month a year ago.
Sales over the same one-year period fell from $432 million to $422 million, according to the study, which noted that moderate inflation pushed food prices up by 1.5 percent between October 2011 and 2011, which was less than the overall inflation rate of 1.7 percent.
A majority of businesses surveyed said they had hiked advertising expenditures in fiscal 2012 (ended June 30 and plan to do so again in 2013 as they seek new ways to reach consumers.
Respondents said they expect modest sales hikes due primarily to volume increases. Most said they plan to maintain employment levels while curbing investment.
During a meeting to discuss the study, business executives called for cooperative competition and short-term and long-term measures to reduce corporate inefficiencies to boost bottom lines.
Edwin Colón Pérez, executive director of Supermercados Selectos, stressed that the incoming administration of Gov.-elect Alejandro García Padilla establish a competitive framework that promotes the creation of local capital to spur investment and economic activity.
(Re-printed from caribbeanbusiness.com)