Puerto Rico Economic Forecast

Puerto Rico Economic Outlook

April 9, 2019

The economy is recovering after devastating hurricanes likely caused the largest economic contraction in decades in fiscal year 2018, which ended in June 2018. In February, the unemployment rate fell to 8.9%, which was substantially down from the same month a year earlier, despite a higher participation rate. In addition, new home sales in July 2018–February 2019 increased compared to the same period a year earlier, pointing to a stronger construction industry and greater consumer confidence. In the political arena, the cash-strapped government submitted its FY 2020 budget to the U.S. federal financial watchdog in late-March, which is expected to contain new spending cuts on top of those made this fiscal year. Meanwhile, a bipartisan group of U.S. lawmakers introduced legislation on 28 March that would admit Puerto Rico into the union; chances of it becoming law, however, are slim.

Puerto Rico Economic Growth

In FY 2019, the economy should return to growth due to a low base effect and stimulus from federal disaster relief funding. However, a tight government budget will weigh on growth prospects. Our panelists forecast that GNP will expand 3.7% in FY 2019, which is down 0.4 percentage points from last month’s estimate, before slowing to 2.8% in FY 2020.

Puerto Rico Economy Data

20132014201520162017
Population (million)3.63.53.53.43.4
GNP per capita (USD)19,18819,46320,01120,58521,057
GNP (USD bn)68.968.869.670.270.6
Economic Growth (GNP, annual variation in %)-0.1-1.8-0.8-1.3-2.4
Unemployment Rate14.014.313.011.711.5
Fiscal Balance (% of GDP)-  -  -  -  -  
Public Debt (% of GDP)94.297.895.191.591.0
Inflation Rate (CPI, annual variation in %, eop)0.41.5-1.30.21.9
Inflation Rate (CPI, annual variation in %)0.90.9-0.3-0.20.6
Current Account (% of GDP)4.74.27.38.3-  
Current Account Balance (USD bn)4.84.37.58.6-  
Trade Balance (USD billion)17.420.026.228.524.9
Exports (USD billion)62.462.569.471.971.1
Imports (USD billion)45.042.543.243.346.2
Exports (annual variation in %)5.90.111.13.6-1.0
Imports (annual variation in %)-3.3-5.71.80.26.7

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