Puerto Rico Growth Revised Down, Despite Stimulus Measures

• Puerto Rico will fall into a significant recession in Fiscal Year 2020 (FY20; July 2019-June 2020), as the global Covid-19 pandemic, and measures to contain it locally, hit commerce, investment and exports.
• We forecast a contraction of 4.0% y-o-y in FY20, noting that fiscal stimulus from the local and federal governments will provide a floor to growth. We expect 2.9% growth in FY21.
• We maintain our downbeat long term outlook on economic activity in the territory, though we note that debt renegotiations, currently on hold, are a pivot point for Puerto Rico’s growth trajectory.

(Source: Fitch)