Economists describe the footprints left by the coronavirus in Puerto Rico

In less than three months, a virus detected 9,000 miles from Puerto Rico has changed everything.

COVID-19, the new member of the coronavirus family with the capacity to affect humans according to the Center for Disease Prevention and Control (CDC, in English) has done what no other force has been able to do, in at least half a century: suddenly dislocate the planet’s economy.

In Puerto Rico, that dislocation was evident a week ago when Governor Wanda Vázquez Garced, after at least a week of blunders by the Health Department to track the pandemic on the island, decreed the closure of all companies not criticism, tourist ports and a curfew for the entire population, except for those whose jobs are essential.

The closure of companies and the social distancing order imposed by Vázquez Garced was established in Executive Order 2020-23 and should expire on March 30.

However, now that COVID-19 is spreading rapidly in Europe and the United States, businessmen and government officials are already preparing for the closure of companies and the curfew to continue in force beyond next week.

Beyond March 30

“This is an unprecedented reality,” said the Secretary of Economic Development and Commerce (DDEC), Manuel Laboy.

According to Laboy, unlike other situations where skepticism of government decisions prevails, there is an almost unquestionable consensus regarding the need to tackle the pandemic. Also from day one, Laboy said, “businesses want to be part of the solution.”

That consensus, however, does not overshadow reality, the official admitted.

In summary, at the moment, there is no certainty about the impact that the COVID-19. It is known, until the closing of the edition, that the pandemic seems implacable: over 260,000 detected cases and over 11,200 deaths across the globe. These figures, provided by Johns Hopkins University, include almost 18,000 confirmed cases and over 225 deaths in the United States, as well as 14 confirmed cases on the island. In Puerto Rico, no fatalities have been confirmed.

“It is going to be a big impact. In the case of Puerto Rico, I dare tell you that it will be in the billions of dollars. Everything will depend on two things: the curfew and the el lockdown ’of the shops”Laboy said.

“You have to be prepared for the possibility that this (the closure and the curfew) will have to be extended,” Laboy continued. “We don’t know if it will be 15 days or 30 more days.”

Laboy later revealed that the government of Puerto Rico is working on a local stimulus plan to complement the federal response and that it could be announced in the coming days.

The flip side of globalization

Just two years ago, just to mark the anniversary of the misnamed Spanish flu and to drive change in the health sector, the World Economic Forum (WEF) proposed “managing the risks associated with the emergence of infectious diseases with potential epidemic or pandemic ”through a multisectoral and public-private coalition to“ strengthen global and national health security ”.

According to the WEF, the estimated potential for a pandemic in this century could mean annual costs of $ 60 billion, including in the figure, the value of years of life lost.

Above all, the organization establishes that the cost of an influenza pandemic alone – the condition that kills thousands of people each year and for which there is still no cure – exceeds $ 570 billion annually. The figure is almost equivalent to the magnitude of the impacts associated with climate change.

“Obviously, this is a face of globalization that we had not contemplated”, said economist Juan Lara, stressing that the main thing is to stop COVID-19 and then dedicate efforts to mending the economy.

“The key is how the case curve behaves. If we manage to flatten the curve, the effect could be concentrated, but if it spreads and we have an Italian crisis, we are talking about a scenario that could be worse than that of (Hurricane) María, ”explained Lara.

One week to make adjustments

Ignacio Álvarez, chief executive officer of Popular Inc., Puerto Rico’s main private employer, indicated after having seen what has happened in Europe, Vázquez Garced’s decision was correct.

“I think that, in that sense, we have acted quickly,” Álvarez said, insisting that more tests are urgent to determine the level of contagion on the island.

But immediately afterwards, Álvarez indicated that “We are going to have to make that (closing) order more flexible and the curfew because maintaining this situation for 60 or 90 days is going to be very difficult.”

For Álvarez, what should happen this week in Puerto Rico is that a plan be drawn up to “transition” towards a model where certain companies and a greater number of people can go to work, establishing specific conditions.

“Banking enters this crisis at its highest capitalization level in our history. This is going to have an impact on profitability, no doubt, but banks are going to have somewhere to lean on. ”Álvarez said.

The president of the Association of Banks of Puerto Rico (ABPR), Aurelio Alemán, agreed on this, pointing out that the financial strength of the sector will serve to support businessmen and consumers affected by the crisis.

“This is not new to us because we have been dealing with significant events for three years,” said the first chief executive officer of First Bancorp, referring to the moratorium operations activated during the 2017 hurricanes and now with the earthquakes in the south.

Be careful with the solutions

“We have to see this in two scenarios, what we have to be doing now and a scenario, where we recognize that this can be for a long time,” Alemán said, adding that, at this moment, “the film is just beginning.”

Alemán maintained that Puerto Rico should dedicate energy to understanding the stimulus package that is being worked on in the federal capital – estimated at $ 1 trillion – and among other measures, it would include support for employers to cover payroll and increases in unemployment benefits. The measures will also include territories.

Alemán also called for caution when designing solutions and instantly criticized legislation aimed at forcing companies to pay their employees in the midst of closing operations.

“We cannot pretend to bleed small merchants or we will see a drastic increase in bankruptcies,” said Aleman, who indicated that the possibility of allocating funds to economic sectors that remain closed for a long time should be considered.

Spinning fine

“There are decisions of the drumstick that are hitting us,” said Carlos M. Rodríguez, president of the Association of Industrialists of Puerto Rico (AIPR).

According to Rodríguez, who also anticipated that the forced closure and curfew will continue after March 30, there is an urgent need to amend Executive Order 2020-23.

Now that President Trump has activated the federal Defense Production law, Rodríguez said, textile factories on the island – which now can’t spin a button because of the government’s ban would – could be ready in seven days to make the gowns. , covers, masks and other accessories that are essential for the management of the pandemic and that are scarce throughout the planet.

“We are talking about products for health and safety. I believe that if we start with the textile sector, we would be contributing to the management of the pandemic and taking advantage of the opportunity that this represents, ”said Rodríguez.

Direct encouragement to people

According to Juan A. Villeta Trigo, president of the Puerto Rican Association of Financial Analysts (APAF), the economic effects of the pandemic on the economic position of individuals in Puerto Rico could be long-lasting.

As an example, Villeta Trigo explained that if the number of part-time workers in Puerto Rico is analyzed, it is about 335,000 people who today have nothing to lean on. That group, according to official statistics, could earn at most about $ 17,000 a year.

“If in four months, the country’s operations cannot be restored, we are talking about a payroll loss of about $ 2,139 million, only in that group”, Exemplified Villeta Trigo.

“This period of stay is going to be extended. Saying that it will end on April 1 is not feasible, only from a purely salubrious point. It is a crisis that no one would have thought of. It is hard and for me, it is vital that the entrepreneur be supported because it is vital, but the support should not be giving money to companies. If you give that money to the individual, that consumer will be able to meet basic needs and that helps companies, “said the economist.

– .