Puerto Rico, US Virgin Islands face painful hurricane recovery — NY Fed

Friday, February 23, 2018

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NEW YORK, United States (AFP) — The US territories of Puerto Rico and the US Virgin Islands will need to take painful actions to restore their economies amid the hurricane devastation, New York Federal Reserve President William Dudley said yesterday.

The island territories, especially Puerto Rico, already faced dire economic realities even before hurricanes slammed into them late last summer, but the recovery now is complicated by shrinking populations, high debt, high unemployment and plunging growth, Dudley said.

“Puerto Rico now must not only complete the recovery from the hurricane, but also do what is necessary to get on a sustainable economic and fiscal path,” Dudley said in prepared remarks.

“Given the island's high debt, unfunded pension obligations, declining population, and now the hurricane, the outlook may seem grim.”

While he provided few specifics on the steps needed, he said they likely would be unpopular.

Hurricane Irma strafed the US Virgin Islands and Puerto Rico in early September and two weeks later the islands were hit again by Hurricane Maria.

New York Fed data showed the storms destroyed more than 80 per cent of Puerto Rico's crops amid communications outages and fuel shortages while transportation links were cut.

The White House has faced stinging criticism for its support of recovery and reconstruction in the storm's aftermath, which left more than 1,000 people dead in Puerto Rico alone.

Even before the storms, both territories were in deep economic distress. Since 2006, economic growth is down 15 per cent in Puerto Rico, which was facing a severe debt crisis as well. Growth had fallen 26 per cent in the US Virgin Islands, and employment has fallen about 15 per cent in both territories.

In the storms, Puerto Rico suffered “by far” the most severe power outage in US history in terms of total customer hours lost, according to the New York Fed.

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