flag Puerto Rico Puerto Rico: Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Puerto Rico's GDP decreased by an estimated 0.6% in 2021, as the pandemic aggravated the country’s economic and social crisis, which had already been deepened by the hurricanes and earthquakes that hit the island in 2017 and early 2020, respectively. Looking ahead, the economy is expected to continue a gradual recovery in the coming years, although growth rates shouldn't reach pre-pandemic levels in the short term. According to he IMF, Puerto Rico's GDP is expected to have a negative growth of 0.3% in 2022 and 2023, as the country's economic performance will still be overshadowed by uncertainty brought on by  the pandemic, the USD 90 billion in damages caused by Hurricane Maria, and the bankruptcy of the central government.

The Puerto Rican economy has been suffering a recession for over a decade, which has led to high levels of debt. In 2021, public debt represented 52.4% of GDP, a rate that is expected to gradually increase to 53.7% of GDP in 2022 and 55.9% of GDP in 2023. Inflation increased to 4% in 2021, but it is expected to decrease to 1.9% in 2022 and 1.4% in 2023. The island has been grappling with the largest municipal bankruptcy in U.S. history (USD 71.5 billion in bonds and USD 50 billion in pension bonds) since 2017, when the economy was devastated by Hurricane Maria. There was a bounce-back in 2019, fuelled by disaster relief funding, which was expected to continue as more federal reconstruction funding rebuilt the island’s infrastructure. However, the pandemic let to a redistribution of funding. To mitigate the impact of COVID-19, the government implemented a series of fiscal measures, which include an increase in Medicaid federal funding and health spending, a temporary postponement of income tax payments, and the allocation of funds to compensate various economic sectors and industries for the business interruption losses (such as the tourism industry, small and medium sized businesses, and self-employed individuals). Although both the sanitary and fiscal measures implemented by the governement in light of the pandemic have been effective, Puerto Rico was already facing significant economic issues when the pandemic hit, so the impact of COVID-19 compounded on a preexisting crisis. Still, despite a complicated situation, the government seeks to increase foreign investment through public-private partnerships and avoid the downgrading of its credit rating, so as not to lose access to financing.

The unemployment rate remained stable in 2020, at an estimated 8.7%. However, many Puerto Ricans have informal jobs that do not qualify them for unemployment benefits and, due to the pandemic, a large percentage of informal workers lost their jobs, which drove them into poverty. Additionally, the overall lack of opportunities in the island has resulted in significant migration outflows, as an increasing number of Puerto Ricans continue to emigrate to the United States. With the destruction of nearly half a million homes after hurricane Maria and increased unemplyment 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. Furthermore, in January 2021, the government declared a state of emergency due to gender-based violence, after a wave of killings targeting women and transgender people.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 104.92103.14e106.58108.27109.51
GDP (Constant Prices, Annual % Change) 1.5e-3.9e-0.6-0.3-0.3
GDP per Capita (USD) 32,786e32,645e34,14335,10635,940
General Government Gross Debt (in % of GDP) 50.252.652.453.755.9
Inflation Rate (%) 0.1-0.52.34.43.3
Current Account (billions USD) 0.000.000.000.000.00
Current Account (in % of GDP) 0.00.00.00.00.0

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
U.S Dollar (USD) - Average Annual Exchange Rate For 1 GBP 1.351.291.331.251.28

Source: World Bank - Latest available data.

 

Main Sectors of Industry

Puerto Rico has very limited natural resources, with arable land being one of the country's most important natural resources. However, despite its importance, only 6% of the island's total area is considered arable. Still, Puerto Rican agriculture produces sugar cane, coffee, pineapple, plantains, animal products and chickens - among other products. Puerto Rico faces some challenges in achieving full utilisation of its agricultural potential, mainly due to the low number of people willing to work in the agricultural sector. As a result, the island imports about 85% of its food needs, even though most of their land is fertile. Overall, agriculture accounts for just 0.6% of Puerto Rico's GDP and employs 1% of the labour force. Given the size of the agricultural industry, the sector wasn't particularly impacted by the COVID-19 pandemic. However, the pandemic led Puerto Rico to analyse their agricultural industry in order to reduce their reliance on imports of food and increase local production, leading the government to plan an expansion of the agricultural sector in the coming years.

The Puerto Rican industry sector mainly produces drugs, electronic devices, petrochemicals, processed foods, clothing and textiles. In general, the country's industry has shifted from industrial production relying on labour (food industry, tobacco, copper and textiles) to a capital-based service industry. Industry accounts for 51.1% of GDP and employs 15.2% of the labour force. Even though the Puerto Rican economy was deeply impacted by the COVID-19 pandemic, the industrial sector remained quite stable throughout 2020 and 2021 in spite of an overall reduction in demand.

The service industry's main sectors include tourism, finance, insurance, trade, real estate, transportation and utilities. Services represent the second largest share in the Puerto Rican economy, with 48.8% of GDP, and it employs 83.7% of the labour force. However, it is estimated that the pandemic had three times the impact on tourism than Hurricane Maria had in 2017. Still, the tourism sector managed to recover in 2021 as passenger arrivals hit a record high in a mark of the island’s ongoing economic recovery from the pandemic.

 
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 48.8

Source: International Labour Organization, ILOSTAT database ; World Bank - Latest available data.

 
Socio-Demographic Indicators 20212022 (e)2023 (e)
Unemployment Rate (%) 8.78.58.3

Source: IMF – World Economic Outlook Database - Latest available data

 

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The Active Population in Figures

201820192020
Labour Force 1,067,0671,064,4011,020,928

Source: International Labour Organization, ILOSTAT database

 
201720182019
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

 

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Country Risk

See the country risk analysis provided by Coface.

 

Sources of General Economic Information

Main Online Newspapers and Portals
Puerto Rico Report
Caribbean Business (in Spanish)
Primera Hora (in Spanish)
El Nuevo Día (in Spanish)
El Vocero de Puerto Rico (in Spanish)
Noticel (in Spanish)
Useful Resources
Official list of government agencies and links
Department of Treasury (in Spanish)
Department of Economic Development and Commerce (in Spanish)
Department of State (in Spanish)
Puerto Rico Infrastructure Financing Authority (in Spanish)
Puerto Rico Government Development Bank
 
 

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Latest Update: July 2022

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