The Puerto Rico economy faces significant challenges related to the government debt crisis and the hurricane recovery, but insurance proceeds and federal recovery funds, coupled with initiatives by the private sector, are providing a significant boost the economy in the short-term.
On September 6, 2017, Hurricane Irma passed within 60 miles of Puerto Rico as a Category 5 storm carrying winds of up to 111 miles per hour. This storm caused several deaths on the island, caused an estimated $1billion in damage and resulted in the loss of electrical power for over 1 million residents. Two weeks later, on September 20, 2017, Puerto Rico was hit by Hurricane Maria. Though this storm had weakened to a Category 4 storm by the time it reached Puerto Rico, it hit the island directly with winds upward of 155 mph, causing extensive damage. Hurricane Maria caused the entire island to lose electrical power, while water and cellular telephone service were lost by 95% or more of the population. Maria caused close to 3,000 deaths in Puerto Rico and total damages are estimated at up to $90 billion.
Prior to the hurricanes in 2017, many investors knew little about Puerto Rico, although the debt crisis affecting Puerto Rico’s government had drawn increased attention to the island. Since the hurricanes, Puerto Rico has been the subject of many articles and stories in the mainstream media as well as the financial press. Consequently, what most investors and the general public associate with Puerto Rico stems from these two events, which generate largely negative impressions of the island. While the problems from the debt crisis and the hurricanes are very real and should not be overlooked, we believe there are other characteristics of Puerto Rico that are being lost as a result of the focus on these two significant events. We intend for this new publication to follow the recovery from these two crises while also taking a broader look at the economy in Puerto Rico and the longer-term opportunities on the island, presenting a broader view of Puerto Rico than the focus on just these two events allows.