Manuel A. Laboy, secretary of the Department of Economic Development and Commerce (DDEC by its Spanish acronym), told THE WEEKLY JOURNAL that, given the coronavirus (COVID-19) pandemic's impact on Puerto Rico's economy, he estimates that 20 percent to 30 percent of the 43 thousand existing businesses in the island will close permanently.
Half of the jobs generated by the private sector —over 600 thousand— come from small and medium-sized businesses with fewer than 50 employees, which have been the hardest hit by the pandemic. These represent 95 percent of the 43 thousand private businesses in Puerto Rico.
"The benchmark is that between 20 percent to 30 percent of existing businesses will be forced to permanently cease operations. Hence, we are trying to mitigate the impact and make them the least possible. This is a reality and it will have a serious economic impact," Laboy stressed.
According to the DDEC secretary, the most affected economic sector is tourism, which prior to the emergency generated roughly 77,500 jobs and contributed 7 percent to the island's gross domestic product (GDP). More than 25 percent of the workforce in tourism has been permanently unemployed.
"The most affected [sector] is tourism. It is followed by retail sales and the restaurant sector, which many do not have the capacity to operate at 50 percent. 100,000 jobs were lost from March to May. With the reopening, 20 thousand were regained, but now with the increase in infections and the setback on opening, we expect the worst," he stated.
The secretary pointed out that—although they are in a better economic position to respond to the coronavirus—the crisis that has caused the pandemic has been the worst he has had to handle during his time at the DDEC.
"The hurricanes were disastrous as well, but we had a definite plan of how we were going to recover. But with the coronavirus, we do not know when it will end. It is a direct attack on health that is creating enormous pressure on the private sector. The state needs to collect its contributions to provide services and this has a dangerous knock-on effect. This is the worst we have ever faced," he stressed.
According to Laboy, there over $1.4 billion in CARES Act funds that have not been disbursed. Moreover, a second round of federal stimuli is being negotiated in Congress and money from the Community Development Block Grant Program for Disaster Recovery (CDBG-DR) that could be used to mitigate the impact that the virus has had on Puerto Rico.
While the secretary voiced his concerns over the pandemic's dire impact on the economy, Gov. Wanda Vázquez and Health Secretary Lorenzo González affirmed that the next executive order—which would come into effect next Saturday—would come with even more restrictions on residents and businesses. The governor is expected to make the announcement sometime this week.