|
Este informe no está disponible
en español.
CARIBBEAN BUSINESS
Santander Securities Bullish On Local Economy
by Lida Estela Rua
March 16, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.
Santander Securities made public its assessment of the local
economy and its outlook for Fiscal Year (FY) 2000 is that the
gross national product (GNP) will grow 3.2%--higher than the Planning
Board's 2.7% estimate--largely fueled by a robust economy, $1.6
billion of hurricane Georges disbursements to be made this year,
and election year spending.
Jose Ramon Gonzalez, Santander Securities president, anticipates
"another year of double-digit growth" for Puerto Rico
banks "which should continue reporting strong earnings"
and further industry consolidations. Local bank stocks are expected
to do better than their U.S. peers this year because valuations
are cheap, trading at an average 8.0 times expected 2000 earnings
vs. 9.8 times in the U.S. And on a price-to-book basis they're
trading at a 6% discount to their U.S. peers. Santander predicted
an average increase of 10% in net income for local banks this
year.
Just as FY 1999's real GNP grew at 4.2% surpassed Planning
Board preliminary estimates of 3.4%, 2000's GNP should also be
higher, at 3.2%. This should benefit the retail sector which will
also be attractive because of" the novelty of new stores
and malls and from increased competition and efficiency of e-commerce
on the island," according to the Santander report.
The report quotes the Planning Board, which said consumption
remains the largest component of the GNP, with an increase of
6.4% in FY 1999, in its three components, durable goods, non-durable
goods, and services. While last year's durable goods increase
was 14.4%, this year's overall consumer increase is expected to
average 5% but durable goods (automobiles, furniture, and household
appliances) are expected to slow down, due mainly to increased
interest rates and energy prices.
Although the Planning Board anticipates an increase of 11.9%
year- to-year in construction investment, reaching $7.4 billion
in FY 2000, of which $3.67 billion is expected to be private investment,
Santander Securities anticipates a slight slowdown in 2001. This
will be due to a decrease in residential demand because previously
constructed units will be delivered and because general elections
will issue in a new government administration "which typically
brings a brief period of adjustment."
Concerning the end of Section 936 of the U.S. Internal Revenue
Code in 2006, Santander said labor-intensive industries would
have eventually left the island regardless of 936's fate. It adds
that capital-intensive industries--pharmaceuticals and electronics--
which have a niche and invested heavily in infrastructure and
human capital, are expected to attract further foreign direct
investment in the island. The local 1998 Tax Incentives Law and
the government's lobbying at federal levels for the permanence
of Section 30A "should help sustain the island's competitive
position."
Other conclusions are that tourism is expected to play an increasingly
important role in economic growth in the next years. Unemployment
is expected to remain at around 11% during 2000, despite continuous
job losses resulting from reductions in labor-intensive manufacturing
and slower rate of job creation from the growth of capital-intensive
manufacturing.
This Caribbean Business article appears
courtesy of Casiano
Communications.
For further information please contact www.casiano.com
| 
