Puerto Rico Economic Outlook
A U.S. territory with economic struggles:
Puerto Rico, a U.S. territory with a GDP of around $115 billion, has faced long-term economic challenges despite its strategic location and ties to the U.S. economy. Once a manufacturing powerhouse benefiting from U.S. tax incentives, the island’s economy has struggled since the expiration of Section 936 tax breaks in 2006, leading to a prolonged recession. High debt levels, population decline, and devastating hurricanes have further strained economic growth. However, recent federal aid and fiscal reforms have helped stabilize the economy.
Manufacturing and federal transfers as key drivers:Manufacturing, particularly in pharmaceuticals and medical devices, remains the backbone of Puerto Rico’s economy, accounting for nearly 50% of GDP and a significant share of exports. The island also depends heavily on federal transfers, which make up over 20% of GDP and help sustain consumer spending. Tourism plays a growing role, with visitor arrivals recovering post-pandemic, but the sector remains smaller compared to other Caribbean nations.
Debt crisis and fiscal reforms:Puerto Rico has been grappling with a severe debt crisis since it defaulted on its $70 billion debt in 2015. The government entered a federally supervised restructuring process under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) in 2016, leading to one of the largest municipal debt restructurings in U.S. history. While the restructuring process has helped reduce debt obligations, austerity measures have limited public sector investment, slowing infrastructure improvements and economic development.
Challenges and economic risks:The island faces persistent economic challenges, including high unemployment, labor force participation below U.S. averages, and outmigration, which has reduced the population by over 15% in the past two decades. Additionally, Puerto Rico remains vulnerable to natural disasters, with hurricanes such as Maria (2017) and Fiona (2022) causing billions in damages. Dependence on imported energy and an unstable power grid further hinder economic competitiveness.
Puerto Rico’s economic outlook:The Puerto Rican economy is expected to see modest growth of around 1–2% in the coming years, supported by federal disaster relief, infrastructure investments, and a resilient manufacturing sector. However, long-term prospects remain uncertain, with population decline, fiscal constraints, and governance challenges weighing on growth. To achieve sustainable recovery, Puerto Rico will need to diversify its economy, modernize infrastructure, and address energy and labor market inefficiencies.
Puerto Rico's Macroeconomic Analysis:
Nominal GDP of USD 118 billion in 2023.
Nominal GDP of USD 126 billion in 2024.
GDP per capita of USD 38,814 compared to the global average of USD 10,589.
GDP per capita of USD 36,367 compared to the global average of USD 10,589.
Average real GDP growth of 0.8% over the last decade.
Average real GDP growth of 0.6% over the last decade.
Sector Analysis
In 2022, services accounted for 50.6% of overall GDP, manufacturing 45.6%, other industrial activity 3.1%, and agriculture 0.7%. Looking at GDP by expenditure, private consumption accounted for 80.0% of GDP in 2023, government consumption 7.1%, fixed investment 14.2%, and net exports -1.3%.Main Economic Indicators
Economic growthThe economy recorded an average annual decrease of 0.8% in the decade to 2023. To read more about GDP growth in Puerto Rico, go to our dedicated page.
Unemployment
The unemployment rate averaged 9.9% in the decade to 2023. For more information on Puerto Rico's unemployment click here.
Inflation
Inflation averaged 1.4% in the decade to 2024. Go to our Puerto Rico inflation page for extra insight.
Economic situation in Puerto Rico
Economic activity remains quite volatile in the country as a result of the small size of the economy: Full-year economic growth rebounded for the second time in four years in FY 2024 (June 2023–July 2024), soaring to 3.2% (FY 2023: +0.5%) and marking the fastest rate since FY 2004. Domestically, private consumption—accounting for roughly 80% of GDP—accelerated on the back of lower inflation and unemployment. Moreover, government spending and fixed investment sped up, with the latter buoyed by reconstruction efforts after Hurricane Fiona made landfall in FY 2023. Externally, goods and services exports grew at a milder pace. Turning to FY 2025, the economy should be weakening, hampered by higher energy tariffs, an underdeveloped energy grid and a hostile Trump administration; economic activity fell in August–November.Puerto Rico Economic Forecasts
Projections out to 2034.23 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 6 expert analysts.
Want to get insight on the economic outlook for Puerto Rico in the coming years? FocusEconomics collects projections out to 2034 on 23 economic indicators for Puerto Rico from a panel of 6 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Puerto Rico economy. To download a sample report on the Puerto Rico's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.