Apr 19, 2018 restoring growth and prosperity april 19, 2018 as certified by the financial oversight and management board for puerto rico new fiscal plan for puerto rico. Puerto rico is an extraordinary case study for those interested in the process of economic growth and its determinants. Puerto rico s economy, now based on services and manufacturing, was dominated by agriculture until the mid20th century. Tourism is a major and growing contributor to the caribbeans economy tourism is one of the most important economic sectors in the caribbean.
Freedman is also senior research fellow on labour markets at the centre for economic performance of the london school of economics. When cuba closed shortly thereafter, tourism activity leapt to san juan and from there spread through the. To achieve economic growth, puerto rico will have to halt and then reverse its chronic population decline. The economy of puerto rico restoring growth edited by susan m. Its path to industrialization was paved with corporate tax breaks.
In this report, we identify five factors that in our view pose significant competitive challenges to the island. Since 2006, puerto rico s real gross national product gnp has shrunk by more than 22% as of 2018. Puerto ricos new fiscal plan center for economic and policy. Restoring growth through fiscal responsibility juan carlos batlle president government development bank for puerto rico juan carlos pavia director office of management and budget jesus f. However, the task force did nothing more than make recommendations, which is why preri strongly urges the congress, federal agencies and bureaus listed in the report to swiftly respond and adhere to the recommendations spelled out in the report, to ensure that the resolution of puerto rico s economic crisis remains a top priority.
Over the past decade, as puerto rico s debt has expanded. Congressional task force on economic growth in puerto rico. At the same time, puerto rico has not generated growth in mediumsized enterprises, based locally, to offset the declining role of the large mainland firms. But amidst the rubble and heartache lies one of the greatest opportunities in the modern era not just to rebuild, but to reimagine the possibilities for. Proposing solutions, convened by the harvardmit puerto rican caucus. Puerto rico faces a severe fiscal crisis, but this is merely a symptom of puerto rico s primary disease.
This page has economic forecasts for puerto rico including a longterm outlook for the next decades, plus mediumterm expectations for the next four quarters and shortterm market predictions for the next release affecting the puerto rico economy. When the great recession hit in 2008, puerto rico s economy was already in a fragile fiscal and financial position. For over a decade, puerto rico has experienced a severe fiscal and economic crisis. Aug 29, 2007 a nonincorporated territory of the united states, puerto rico operates under u. Puerto rico, catalyzed by the presidents petty personal barbs with san juans mayor. The impact of the resolution of any pending litigation in the title iii cases because of the uncertainty and unpredictability of these factors, their impact cannot be included in the assumptions contained in. This page provides forecast and historical data, charts, statistics, news and updates for puerto rico net migration. The commonwealth of puerto rico is in the midst of an economic and fiscal crisis, and without congressional action the situation could become a humanitarian crisis. Trends and developments in the economy of puerto rico. The financial oversight and management board for puerto rico was created under the puerto rico oversight, management and economic stability act of 2016.
How puerto rico can rebuild and become the hong kong of the. Enhanced commonwealth status would establish procedures under which federal laws and regulations applying to puerto rico could be modified selectively in order to enhance the islands economic growth. Since then, the economy has continued to worsen puerto rico has seen its gnp shrink by 20%, labor participation has fallen to a record low of 38%, and the islands population has fallen by 10%. Addressing puerto ricos economic and fiscal crisis and. From hurricane recovery to sustaining economic growth, puerto rico faces daunting challenges, said congressman sean duffy. Haughwout the difficult economic and financial issues facing the commonwealth of puerto rico have remained very much in the news since our post on options for addressing its fiscal problems appeared last fall. Under spanish colonial rule the island was largely neglected because of its limited mineral resources. This monograph summarizes the analyses published in that volume and presents a set of policy recommendations to. In the late 1950s, puerto rico made a strong bid for tourism as part of its operation bootstrap economic development program. Already mismanaged and saddled with debt, the island territory now faces the virtually insurmountable task of rebuilding its infrastructure and economy. This reports shows how important the tourism sector is for puerto rico and how the task force can implement changes in the shortterm. The virgin islands economy has been more adversely affected.
In a variety of ways, such as occupational licensing and control. On the other hand, it should be obvious that obtaining debt relief is not sufficient in and of itself to jumpstart economic growth. Puerto rico competitiveness rank 20082015 data 20192020. The puerto rican political economy james dietz latin american perspectives, vol. Barry bosworth and susan collins use the term secular deterioration in their economic growth, in susan m.
Puerto rico s economy is affected by the same factors affecting the us economy. But i am proud to work with the puerto rico economic development and prosperity caucus and governor rossello to ensure that 3. The downturn in the us economy that began in 2001 negatively impacted the puerto rican economy more severely than the mainland economy. Puerto ricos eyepopping economic situation, in charts. Building on cnes initial vision to develop a growth strategy for puerto rico, the two institutions undertook a research project pairing researchers from the island and the mainland. Puerto ricos economic challenges predate its current fiscal crisis. The economy of puerto rico brookings, 2006, in which economists from puerto rico and the united states examine the islands economy and propose strategies for sustainable growth. Puerto rico s labor force participation rate is among the lowest in the world, with less than half of eligible workers participating in the formal economy. Puerto ricos economy, now based on services and manufacturing, was dominated by agriculture until the mid20th century. Aug 29, 2007 this is a companion volume to restoring growth.
The economy of puerto rico is classified as a high income economy by the world bank and as. Puerto rico is the 32 most competitive nation in the world out of 140 countries ranked in the 2018 edition of the global competitiveness report published by the world economic forum. Report on the competitiveness of puerto ricos economy i foreword our commitment to puerto rico at the federal reserve bank of new york popularly known as the new york fed, we are proud that puerto rico is part of the second district, which we represent in the federal reserve system. Efforts to restructure puerto rico s defaulted debt are progressing, but the economic outlook is clouded by steep fiscal challenges and the coronavirus outbreak. The economy of puerto rico brookings, 2006, in which economists from puerto rico and the united states examine the islands economy and propose. Thus, more than 100 students from more than 25 universities from puerto rico and the continental united states gathered at harvard university in april 2007, to participate in the conference restoring economic growth in puerto rico. Puerto rico department of economic development commerce spanish acronym. Restoring growth, a booklength volume that incorporates the work of thirtytwo renowned scholars from the mainland and the island, and analyzes various key economic development issues such as education, the macroeconomic sphere, entrepreneurship, labor supply and labor force. The main drivers of puerto rico s economy are manufacturing, primarily pharmaceuticals, textiles, petrochemicals, and electronics. Puerto rico has been one of the most dynamic and competitive economies in latin america and the caribbean region until recent years, puerto rico s economy relies mainly on federal aid from the united states government. The lost decade of economic growth, together with government austerity policies.
The important point in the case of puerto rico is that any savings derived from a reduction in debt service be used exclusively to ad. The financial oversight and management board for puerto rico. New fiscal plan for puerto rico restoring growth and. A nonincorporated territory of the united states, puerto rico operates under u. Congressional task force on economic growth in puerto rico report to the house and senate introduction on june 30, 2016, the puerto rico oversight, management, and economic stability act, or promesa, was enacted into law as public law 114187. Impacts on the economic, social and natural environments. May 17, 2006 this is a companion volume to restoring growth. Oct 27, 2017 puerto rico sees an opportunity to reimagine the island. This monograph summarizes the analyses published in that volume and presents a set. To frame the current situation, the contributors begin by assessing puerto rico s past experience with various growth policies. The downturn coincided with the phaseout of tax preferences that had led us firms to invest heavily in the commonwealth since the 1950s, and a steep rise in the price of oil, which generates most. The financial oversight management board, a federallymandated advisory group, has worked to help puerto rico deal with its financial crisis and.
It will also offset the fiscal cost of restoring the manufacturing tax breaks. Puerto rico s economy has been almost continuously in a recession for more than a decade only in 2012 was gdp flat instead of negative. The race to win the ruling partido nuevo progresista nomination for governor is tight between the incumbent and pedro pierluisi, but whoever wins is likely to win the november election. The sustained slump in the economy has contributed to the islands fiscal challenges, and puerto ricos fiscal challenges have in turn added to the difficulty it faces attracting private investment and restarting growth. Long road to economic recovery forecast for puerto rico. After the devastation wrought by hurricane maria, puerto rico has an uncertain future. Here, we focus on an analysis of the islands financial health. Control of many of those islands, including the virgin islands, shifted back and forth among european powers, as peace treaties settled in europe seldom applied in the new world. Report on the competitiveness of puerto ricos economy.
Freedman is the herbert ascherman professor of economics at harvard university and a collaborator on the center for the new economys book the economy of puerto rico. Puerto rico planning board and independent economists project economic growth for fiscal year 2012 and 20 economic growth real gross national product r revised p preliminary projected revised estimate local economists average consensus. Many puerto ricans, unable to find jobs on the island, have migrated to the mainland, with the population and labor force estimated to be shrinking at a rate of 1. Puerto ricos worsening economic crisis investors business. The result is the publication of the economy of puerto rico. Puerto rico s economic recovery may now take more than a decade. Puerto ricos difficulties are rooted, in part, in its earlier success. Puerto rico s economy recorded little growth after 1996, and real inflationadjusted gdp has been falling for the past decade.
Proposing solutions, convened by the harvardmit puerto. As puerto rico attempts to recover from the devastating impact of. How puerto rico can rebuild and become the hong kong of. Oct 09, 2017 puerto rico s economy recovery may have been pushed back more than 10 years after hurricane maria. In the decades immediately after world war ii, the island enjoyed rapid growth, comparable to that achieved by the socalled asian tigers. The board consists of seven members appointed by the president of the united states and one ex officio member designated by the governor of puerto rico. Potential economic impacts of changes in puerto ricos status. Over the past decade, as puerto ricos debt has expanded. Life after debt in puerto rico center for economic and policy. The economy of puerto rico is classified as a high income economy by the world bank and as the most competitive economy in latin america by the world economic forum. Restoring economic growth is crucial to ensuring that creditors see a meaningful recovery. What are the causes of puerto ricos economic crisis.
This plan was built on the principle of restoring growth in the short term before. Puerto rico economic recovery may now take more than 10 years. Jenniffer gonzalez calls puerto rico economic development and. Puerto rico gdp annual growth rate 19612018 data 2019.
Sotoclass is the executive director of the center for the new economy, a puerto rico based think tank focusing on. Virgin islands congressional research service 2 islands to the east in the lesser antilles were thus largely left to others. An update on the competitiveness of puerto ricos economy. Puerto rico sees an opportunity to reimagine the island. As we noted at the time, the boards initial fiscal plan would not have led to an economic recovery in the foreseeable future. Puerto rico had one of the most dynamic economies in the caribbean region until 2006. Puerto rican economic growth crashed in the early 2000s. The manufacturing sector has undergone fundamental changes over the years as a result of increased emphasis on higherwage. Such large scale development projects represent an effort by china and its stateowned enterprises to make economic strides and gain influence in the caribbean. To allow students to make their own contributions in jumpstarting the puerto rican economy and restoring growth.
Feb 24, 2016 ken buckfire, miller buckfire president and managing director, weighs in on puerto rico s debt. Puerto rico that includes all important policy and budget decisions for the island. Puerto rico economy, politics and gdp growth summary the. Puerto rico currently employs 30,000 in the clothing industry. The sustained slump in the economy has contributed to the islands fiscal challenges, and puerto rico s fiscal challenges have in turn added to the difficulty it faces attracting private investment and restarting growth.
This book is the culmination of a collaborative effort between the brookings institution and the center for the new economy cne. Puerto rico has a history of poor fiscal performance. Oct 03, 2017 after the devastation wrought by hurricane maria, puerto rico has an uncertain future. Puerto rico economic analysis report 202014 the dominant sectors of puerto ricos economy in terms of production and income are manufacturing and services. Export a ris file for endnote, procite, reference manager, zotero, mendeley export a text file for bibtex note.
Puerto rico s economic challenges predate its current fiscal crisis. New fiscal plan for puerto rico restoring growth and prosperity. Apr 18, 2018 restoring economic growth is crucial to ensuring that creditors see a meaningful recovery. Puerto rico s economy may not be as large as it was in 2006 until 2034, according to a new study by a prominent economic consulting firm. As it recovers, puerto rico needs more people and more. How restrictive labor laws keep puerto ricos economy down. The recent downgrading of puerto rico s public debt to non investmentgrade was a strong signal that the current fiscal. However, the harbour at san juan prospered as a major link in spains oceanic trade routes, and massive fortifications were. Net migration for puerto rico from the world bank for the world development indicators wdi release. The decline in the labor force participation rate noted above, and its failure to recover after the great.
Over 44% of puerto rico residentslive in poverty, more than double the highest poverty rate of any u. Jul 27, 2015 puerto rico faces a severe fiscal crisis, but this is merely a symptom of puerto ricos primary disease. Until the 1940s, puerto rico s economy was dominated by sugar production up. This page provides puerto rico gdp annual growth rate actual values, historical data, forecast, chart, statistics, economic.
A driver for economic growth october, 2016 abstract the tourism industry represents a strategic opportunity to reactivate the local economy. The missing jobs in puerto rico are largely in industries that would employ the least educated workers. Using a mixture of economic, political and mathematical strategies, here are five ways to fix puerto ricos economic meltdown. Addressing puerto ricos economic and fiscal crisis and creating a path to recovery. Archived from the original pdf on november 14, 2018. The puerto rican political economy james dietz latin american. That would be one step toward a more economically sound future one that sees real economic growth and progress. The economic challenge of chronic population decline. This page provides puerto rico gdp annual growth rate actual values, historical data, forecast, chart, statistics, economic calendar and news. An economic crisis is the heart of puerto ricos financial. The lost decade of economic growth, together with government austerity policies, and a decline in.