Puerto Rico: Economic Outline
According to the latest IMF projections, Puerto Rico's GDP decreased by an estimated 0.7% in 2023, following a 2% increase one year earlier. The IMF expects the island’s economy to experience a further economic contraction this year (-0.2% of GDP), with a null growth rate in 2025.
The Puerto Rican economy has been suffering a recession for over a decade, leading to high levels of debt. In 2023, the general government gross debt was estimated at 16.7% of GDP by the IMF, with a slight uptick expected over the forecast horizon (17.3% by 2025). In March 2022, Puerto Rico concluded its largest debt restructuring by issuing USD 7.4 billion in new bonds to replace USD 34.3 billion in outstanding bonds, resulting in a significant reduction of 78% (data U.S. Government Accountability Office). Additionally, the restructuring included various measures to reform Puerto Rico's ailing pension system. These initiatives comprised the establishment of a new trust fund, funded by government surpluses, aimed at bolstering future pension payments. In fiscal year 2023, Puerto Rico's general fund revenues exceeded the original projections by the Puerto Rico Oversight Board by 12.8%. However, they fell short compared to fiscal year 2022. The Puerto Rico Treasury Department reported revenues of USD 12.57 billion for the fiscal year ending on June 30, marking a decrease of 1.6% compared to the previous year. A persistent impact of high inflation has continued in fiscal year 2023, but there is a significant likelihood of reduction for fiscal year 2024. The monetary policy measures imposed by the United States Federal Reserve aim to increase the benchmark interest rate or cost of money to control credit and, in turn, curb inflation. According to the latest reports, inflation is expected to decrease significantly in the United States, including Puerto Rico, for fiscal year 2024. The IMF expects the inflation rate to hover between 1.5-2% in 2024 and 2025 (down from 2.9% in 2023).
Labor force participation remains low, with only 42% of individuals of working age being employed. However, the unemployment rate has reached a historic low of 5.7% in 2023 (official governmental data). Furthermore, although the number of individuals leaving the island has decreased (Puerto Rico experienced a net loss of 0.4%, or 14,422 people, in 2023 compared to a loss of 1.3%, or 42,580 people, in 2022), the birth rate has declined and the death rate has risen. Nonetheless, the population continues to decline at a slower pace. With the destruction of nearly half a million homes after Hurricane Maria and increased unemployment brought on by the pandemic, nearly half of the population still lives below the poverty line. The island has also been dealing with a wave of violence and crime, primarily linked to gang activity and drug trafficking.
| Main Indicators | 2022 | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) |
|---|---|---|---|---|---|
| GDP (billions USD) | 115.02 | 117.52 | 119.04 | 121.31 | 124.22 |
| GDP (Constant Prices, Annual % Change) | 2.0 | -0.7 | -0.2 | 0.0 | 0.3 |
| GDP per Capita (USD) | 36,123 | 37,093 | 37,765 | 38,678 | 39,805 |
| General Government Gross Debt (in % of GDP) | 16.5 | 16.7 | 17.1 | 17.3 | 17.4 |
| Inflation Rate (%) | n/a | 2.9 | 1.5 | 1.9 | 2.1 |
| Current Account (billions USD) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Current Account (in % of GDP) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
Source: IMF – World Economic Outlook Database - October 2021.
Note: (e) Estimated Data
| Monetary Indicators | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| U.S Dollar (USD) - Average Annual Exchange Rate For 1 GBP | 1.35 | 1.29 | 1.33 | 1.25 | 1.28 |
Source: World Bank - Latest available data.
Puerto Rico has very limited natural resources, with arable land being one of the country's most important assets. However, despite its significance, only 5.7% of the island's total area is considered arable. Overall, agriculture accounts for just 0.7% of Puerto Rico's GDP and employs 1% of the labor force. Puerto Rican agriculture produces sugar cane, coffee, pineapple, plantains, animal products, and chickens, among other goods. Puerto Rico faces challenges in fully utilizing its agricultural potential, mainly due to the scarcity of people willing to work in the agricultural sector. Consequently, the island imports about 85% of its food needs, despite having fertile land. Additionally, the country is prone to natural disasters, which impact its agricultural production.
Industry constitutes 46.2% of GDP and employs 12% of the labor force. Generally, the country's industry has transitioned from labor-intensive industrial production (food industry, tobacco, copper, and textiles) to a capital-based service industry. Puerto Rico produces a diverse array of goods, including textiles, processed food, electronics, pharmaceuticals, supplements and vitamins, medical supplies, and various other products. Manufacturing is estimated to contribute to 43% of GDP, according to the World Bank.
The service industry encompasses sectors such as tourism, finance, insurance, trade, real estate, transportation, and utilities. Services represent the second-largest share of the Puerto Rican economy, contributing to 52.6% of GDP and employing 86% of the labor force. The sectors with the highest average employment are retail trade (130,191), public administration (122,005), and health and social assistance services (96,636), according to data from the National Statistical Institute as of Q3/2023. In 2023, the U.S. territory welcomed over 6.1 million international passengers, marking a year-over-year increase of 18.6%. Additionally, the island's two cruise ports welcome over 500 ships annually. One third of the GDP stems from finance, insurance, real estate, and professional services, as reported by Invest Puerto Rico.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
|---|---|---|---|
| Employment By Sector (in % of Total Employment) | 2.1 | 19.0 | 79.0 |
| Value Added (in % of GDP) | 0.7 | 50.0 | 52.6 |
Source: International Labour Organization, ILOSTAT database ; World Bank - Latest available data.
| Socio-Demographic Indicators | 2024 (e) | 2025 (e) | 2026 (e) |
|---|---|---|---|
| Unemployment Rate (%) | 6.6 | 6.5 | 6.0 |
Source: IMF – World Economic Outlook Database - Latest available data
| 2018 | 2019 | 2020 | |
|---|---|---|---|
| Labour Force | 1,067,067 | 1,064,401 | 1,020,928 |
Source: International Labour Organization, ILOSTAT database
| 2017 | 2018 | 2019 | |
|---|---|---|---|
| Total activity rate | 50.07% | 50.23% | 50.32% |
| Men activity rate | 59.22% | 59.04% | 58.62% |
| Women activity rate | 41.57% | 42.02% | 42.57% |
Source: International Labour Organization, ILOSTAT database
See the country risk analysis provided by Coface.
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: April 2024
