As we start the 4th quarter of 2023, we have seen the global economy in 2023 bottom out to pre-pandemic levels. While container volumes have contracted including the trade with Puerto Rico, the Commonwealth ended their fiscal year (June ’23) on a high note considering the devastation of hurricane Fiona in September of 2022. Economic activity expanded 3% year over year. Unemployment of 6.2% remains stable. Manufacturing continues to improve and benefits from US companies pursuing domestic and near sourcing procurement. The pandemic highlighted our dependencies on foreign made products especially in the healthcare field. This is a positive trend for the island. Leisure and hospitality (tourism) are now back to 2019 levels. Puerto Rico remains a key, desirable destination to visit.
While the outlook for Puerto Rico is stable, it is hard to isolate the island from the geopolitical environment that has the US embroiled in a prolonged war internationally as well as a tense situation at our southern border. While the attention of our government is preoccupied with preventing a shutdown, it is certain that we will experience a slowdown in the passing of key legislation that will benefit the island, namely the Farm Bill. The current 5-year bill expires at the end of this year. The delay of the bill prolongs Puerto Rico’s period of being considered for the SNAP program, the nutritional program with roots to the Food Stamp program. Entry into the SNAP program will increase benefits and enrollment for Puerto Rico. Given the gridlock in Washington, all legislation impacting Puerto Rico will be delayed. With a budget conscious congress, we may expect ‘watering down’ of the bill. This is significant given that 43% of the population depend on this program.
As mentioned earlier the downward trend of container volume to Puerto Rico has taken its toll. Last month, a long-time carrier of 25 years between stateside and Puerto Rico ceased operations. All prudent carriers are evaluating the market shifts and making the necessary adjustments.