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Economy of Puerto Rico
San Juan, capital city of the Commonwealth of Puerto Rico.
Rank	58th (nominal)
Currency	United States Dollar (USD$)
Fiscal year	1 July - 30 June
Trade organisations	CARICOM (observant), Interpol (sub-bureau), IOC, ITUC, UNWTO (associate), UPU[1]
Statistics
GDP	US$98.76 billion (FY 2011)[2]
GDP growth	−2.00% (Fed 2012)[2]
GDP per capita	$26,588 (nominal) (FY 2011)
GDP by sector	Manufacturing: 46.4%, Finance, insurance and real estate: 19.6%, Services: 12.5%, Government: 8.6%, Trade: 8%, Transportation and other public utilities: 2.9%, Construction and Mining: 1.7%, Agriculture: 0.6% (2010)[1]
Inflation (CPI)	2.47%[3] (FY 2010)
Population below poverty line	2% (2009)[1]
Gini coefficient	0.537 (2010)[4]
Labour force	1.286 million[5] (Mar 2012)
Labour force by occupation	Services: 29.9%, Government: 23.7%, Trade: 21.8%, Manufacturing: 9.2%, Transportation and other public utilities: 5.2%, Construction and mining: 4.9%, Finance, insurance and real estate: 3.7%, Agriculture: 1.6%. (2010)
Unemployment	13.7% (April 2013)[5]
Average gross salary	$27,190 annual (May 2011) [6]
Main industries	Pharmaceuticals, electronics, apparel, food products, tourism. (2010)
Ease of Doing Business Rank	41st[7]
External
Exports	$64.88 billion FOB (2011 est.) [8]
Export goods	Chemicals, electronics, rum, beverage concentrates, medical equipment, canned tuna, apparel.[8]
Main export partners	United States 90.3 %,  United Kingdom 1.6 %,  Dominican Republic 1.4 %,  Netherlands 1.4 %, among others. (2010)
Imports	$44.67 billion CIF (2011 est.) [8]
Import goods	chemicals, machinery and equipment, food, petroleum products, clothing, fish [8]
Main import partners	United States 55 %,  Ireland 23.7 %,  Japan 5.4 %, among others. (2010)
Public finances
Public debt	$67.7 billion (66% of GDP)[9] (FY 2012)
Budget deficit	$1.1 billion[10]
Revenues	$31.3 billion (FY2010)[11]
Expenses	$29.1 billion (FY2010)[citation needed]
Credit rating	Standard & Poor's[12] BBB+ Outlook Stable Moody's[13] Baa3 Outlook Negative
All values, unless otherwise stated, are in US dollars

The Economy of Puerto Rico is classified as a high income economy by the World Bank.^[14] Puerto Rico itself is a non-member of the OECD.

Overview[edit]

Despite its relatively small geographical area and limited availability of natural resources, Puerto Rico's productivity is exceptionally high. It has the highest nominal GDP per capita^[15] in Latin America, amounting to $26,588 in 2011. Also, Puerto Rico has the second most competitive economy among Ibero-American states, surpassed only by Chile, according to the latest World Economic Forum's Global Competitiveness Report.^[16] The commonwealth has modern infrastructure, a large public sector and an institutional framework guided by the regulations of U.S. federal agencies, most of which have an active and continued presence in the archipelago.

The financial sector is of great prominence, accounting for 5.75% of its Gross National Product (GNP) in 2010, and, similar to any other state of the union, it's also fully integrated into the U.S. financial system, governed under federal regulations, being a constituent part of the jurisdiction of the Federal Reserve Bank of New York, responsible for implementing monetary policy enacted by members of the Federal Reserve Board in Washington, D.C. throughout the United States.

During fiscal year (FY-2012), the Consolidated Budget for the archipelago, including both direct transfers from federal programs (Social Security and Medicare benefits for workers, Veteran's benefits, Pell Grants and student loan's interest subsidies and miscellaneous temporary appropriations -e.g. American Recovery and Reinvestment Act of 2009 grants totalling $2.6 billion-) represented more than $28.7 billion, or approximately 30% of its GDP, while revenues surpassed $31 billion.^[17] In 2010, federal transfers amounted $16.710 billion, while the Commonwealth's government managed funds of $10.12 billion.

As result of the recent reduction of Spain's credit rating,^[12] Puerto Rico holds the second highest credit rating awarded by the agency to a Spanish speaking territory in the long term (BBB+, Stable ).

Puerto Rico gross domestic product (GDP) by economic sector.

History[edit]

United States rule[edit]

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In 1935, United States President Franklin D. Roosevelt launched the Puerto Rican Reconstruction Administration, which provided agricultural development, public works, and electrification of the island.

In the late 1940s a series of projects called Operation Bootstrap encouraged, using tax exemptions, the establishment of factories. Thus manufacturing replaced agriculture as the main industry.

Since the Great Depression there has been external investment in capital-intensive industry such as petrochemicals, pharmaceuticals, and technology.

Operation Bootstrap was based on an "industrialization-first" campaign and modernization, focusing the Puerto Rican economy on exports, especially to the United States. Though initially there were large gains in employment and per capita income, recessions in the United States were magnified in the country and have repeatedly hampered Puerto Rican development.^[18]

With the signing of the North American Free Trade Agreement and the Dominican Republic–Central America Free Trade Agreement, Puerto Rico lost a trade advantage over some Latin American countries as the right to duty-free imports to the U.S. market were expanded. Puerto Rico is also subject to the minimum wage laws of the United States, which gives lower-wage countries such as Mexico and the Dominican Republic an economic advantage in the Caribbean.^[19]

Current times[edit]

Federal transfer payments to Puerto Rico make up more than 20% of the island's personal income.^[20] By comparison, the poorest state, Mississippi, had a median level of $21,587, according to the U.S. Census Bureau's Current Population Survey, 2002 to 2004 Annual Social and Economic Supplements.^[21] Since 1952, the gap between Puerto Rico's per capita income and the national level has changed substantially – from one third the U.S. national average and roughly half that of the poorest state in 1952, to 10% less than the poorest state in 2007. In 2006, the unemployment rate was 11.7%. By November 2009, it stood at 12% and had increased to 15.7% by October 2010.^[22] Currently the unemployment rate is at 13.7%^[23] The U.S. state with the highest unemployment in October 2007 was Michigan, at 7.7%,^[24] and the U.S. average was 4.4%.^[25] On November 15, 2006, the Legislature of Puerto Rico implemented a 5.5% sales tax.^[26] An optional 1-1.5% municipal tax had been in effect since May 2006.

The public debt of Puerto Rico has grown at a faster pace than the growth of its economy, reaching $46.7 billion in 2008.^[27] In January 2009, Governor Luis Fortuño enacted several measures aimed at eliminating the government's $3.3 billion deficit.^[28]

Tourism[edit]

Tourism is an important component of the Puerto Rican economy supplying an approximate $1.8 billion. In 1999, an estimated five million tourists visited the island, most from the United States. Nearly a third of these were cruise ship passengers. An increase in hotel registrations, which has been observed since 1998, and the construction of new hotels and the Puerto Rico Convention Center are indicators of the current strength of the tourism industry.

The following are significant public and private projects (finished, planned or under construction) which are aimed at increasing the tourism industry in Puerto Rico:

• The Puerto Rico Convention Center (finished)
• The Puerto Rico Convention Center District (finished)
• The Pan American Port Terminal in Isla Grande for cruise ships and liners (finished)
• Coliseo de Puerto Rico, José Miguel Agrelot (finished)
• The Condado Trio Renovation Project (Condado Vanderbilt and La Concha hotels) (finished)
• Luis Muñoz Marín International Airport expansion and renovation project (under construction)
• Fairmont Coco Beach Resort
• JW Marriott Resort at Río Grande (planned)
• Numerous other hotel projects underway (including new hotels and expansions) adding hundreds of rooms to the industry
• The Mall of San Juan (under construction; estimated completion March 26, 2015) ^[29]

As of April 17, 2012, most of the cruises that visited the island are leaving because of economic reasons,^[30] thus affecting foreign and homeport tourists alike.

Trade with the United States[edit]

As an unincorporated territory of the United States, travel and trade between Puerto Rico and the U.S. mainland or other U.S. territory are not subject to international border controls. However, all goods moving from Puerto Rico to the U.S. mainland are subject to agriculture inspection controls by USDA.^[31] Travelers and goods move without restriction between Puerto Rico and other U.S. territories such as U.S. Virgin Islands. Travel and trade between Puerto Rico and territory outside U.S. jurisdiction are subject to international border controls.

Mail bound for the mainland from Puerto Rico and Hawaii is subject to USDA inspection for quarantined plant matter.^[32]

Puerto Rico may collect import duties only to the same degree it taxes the same goods produced domestically.^[33]

Puerto Rico receives cross-over subsidies, which generated approximately $371 million in 2008.^[34]

Per capita income and GDP per capita[edit]

Puerto Rico has a GDP per capita of $16,300 (2010 est.). Compared to the rest of the world they are ranked 73rd.^[8] Puerto Rico's GDP per capita has been declining in recent years ($18,100 (2008 est.), and $17,400 (2009 est.)). According to statistics from the Central Intelligence Agency (CIA), its GDP per capita is the 4th highest in the Caribbean, behind the Bahamas ($30,400), Barbados ($25,000), and Trinidad and Tobago ($20,000).^[8]

According to the Bureau of Labor Statistics of the Department of Labor of the United States,^[35] the mean annual salary of residents of Puerto Rico is $27,190, the lowest among U.S. territories continuously surveyed periodically by this institution. Guam has the second lowest mean salary to $31,840, closely followed Mississippi, a state, with $34,770. This spread in mean wages could be explained by a minimum wage law for certain industries that are capped to 70% of the federal minimum wage of $7.25 per hour.^[36][37]

Other statistics[edit]

• Debt - External: $56.82 billion (31 December 2010 est.)^[8]
• GDP

• Purchasing Power Parity: $64.84 billion (2010 est.)^[8]
• Official Exchange Rate: $93.52 billion (2010 est.)^[8]
• Real Growth Rate: 5.8% (2010 est.)^[8]
• Per Capita: $16,300 (2010 est.)^[8]

• Inflation Rate (consumer prices): 2.9% (2011 est.)^[8]

• Industrial production growth rate: NA%

• Household income or consumption by percentage share:

• lowest 10%: NA%
• highest 10%: NA%

• Budget:

• revenues: $8.1 billion Central Government, $25 Billion with Public Corporations
• expenditures: $9.6 billion Central Government

• Electricity

• production: 23,720 GWh
• consumption: 22,600 GWh
• exports: 0 kWh
• imports: 0 kWh (2007 est.)

• Electricity – production by source:

• fossil fuel: 98.06%
• hydro: 1.96%
• nuclear: 0%
• other: 0% (1998)

• Agriculture – products: sugarcane, coffee, pineapples, plantains, bananas; livestock products, chickens ^[8]
• Exports – commodities: chemicals, electronics, apparel, canned tuna, rum, beverage concentrates, medical equipment ^[8]
• Exports: $64.88 billion (2011 est.) ^[8]
• Imports – commodities: chemicals, machinery and equipment, clothing, food, fish, petroleum products^[8]
• Imports: $44.67 billion (2011 est.) ^[8]

• Tax: 9.0%

• Labor Force: 1.286 million (March 2012)^[8]

See also[edit]

Puerto Rico portal

• Cross-Over Subsidies
• Economy of the United States

External links[edit]

• The Bankrupt Economy
• History of Puerto Rico
• Changing of the Guard: Puerto Rico
• UW Press: Sugar and Slavery in Puerto Rico

Notes[edit]

v t e Caribbean Community (CARICOM) Secretariat (Secretary-General) Members Antigua and Barbuda Bahamas1 Barbados Belize Dominica Grenada Guyana Haiti1 Jamaica Montserrat2 St. Kitts and Nevis St. Lucia St. Vincent and the Grenadines Suriname Trinidad and Tobago Associate members Anguilla Bermuda Cayman Islands British Virgin Islands Turks and Caicos Islands Observers Aruba Colombia Curaçao Dominican Republic Mexico Puerto Rico Sint Maarten Venezuela Institutions Single Market and Economy (CSME) Disaster Emergency Management (CDEMA) Meteorological Organisation (CMO) Meteorological Institute (CMI) Examinations Council (CXC) Court of Justice (CCJ) CFC CEHI CARDI REPAHA ACCP CARICAD CFNI CCC CRITI Related organizations Organisation of Eastern Caribbean States (OECS) 1 Member of the Community but not of the CARICOM Single Market and Economy (CSME) 2 British overseas territory awaiting entrustment to join the CSME