Economy of Puerto Rico

From Wikipedia, the free encyclopedia - View original article

Economy of Puerto Rico
San Juan from above.jpg
San Juan, capital city of the Commonwealth of Puerto Rico.
Rank58th (nominal)
CurrencyUnited States Dollar (USD$)
Fiscal year1 July - 30 June
Trade organisationsCARICOM (observant), Interpol (sub-bureau), IOC, ITUC, UNWTO (associate), UPU[1]
Statistics
GDPUS$98.76 billions (FY 2011)[2]
GDP growthDecrease −0.09% (FY 2011)[2]
GDP per capitaIncrease $26,588 (nominal) (FY 2011)
GDP by sectorManufacturing: 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
41.4% (2009)[1]
Gini coefficient0.537 (2010)[4]
Labour force1.286 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)
UnemploymentDecrease 13.5% (August 2012) [5]
Average gross salaryIncrease $27,190 annual (May 2011) [6]
Main industriesPharmaceuticals, electronics, apparel, food products, tourism. (2010)
Ease of Doing Business Rank43rd[7]
External
Exports$61.7 billions FOB (2010)
Export goodsChemicals, electronics, rum, beverage concentrates, medical equipment, among others. (2010)
Main export partners United States 90,3 %,
 United Kingdom 1,6 %,
 Dominican Republic 1,4 %,
 Netherlands 1,4 %,
among others. (2010)
Imports$40.8 billions CIF (2010)
Import goodschemicals, machinery and equipment, food, petroleum products, among others. (2010)
Main import partners United States 55 %,
 Ireland 23,7 %,
 Japan 5,4 %,
among others. (2010)
Public finances
Public debtnegative increase $65.2 billions (66% of GDP)[8]
(FY 2010)
RevenuesIncrease $31.3 billions (Consolidated Budget) (FY-2010)
Increase $13.1 billions (Net Revenues, Commonwealth) (FY-2010)[9]
ExpensesDecrease $29.1 billions (Consolidated Budget) (FY-2010)
Decrease $10.2 billions (Commonwealth) (FY-2010
Credit rating
All values, unless otherwise stated, are in US dollars
 
Jump to: navigation, search
Economy of Puerto Rico
San Juan from above.jpg
San Juan, capital city of the Commonwealth of Puerto Rico.
Rank58th (nominal)
CurrencyUnited States Dollar (USD$)
Fiscal year1 July - 30 June
Trade organisationsCARICOM (observant), Interpol (sub-bureau), IOC, ITUC, UNWTO (associate), UPU[1]
Statistics
GDPUS$98.76 billions (FY 2011)[2]
GDP growthDecrease −0.09% (FY 2011)[2]
GDP per capitaIncrease $26,588 (nominal) (FY 2011)
GDP by sectorManufacturing: 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
41.4% (2009)[1]
Gini coefficient0.537 (2010)[4]
Labour force1.286 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)
UnemploymentDecrease 13.5% (August 2012) [5]
Average gross salaryIncrease $27,190 annual (May 2011) [6]
Main industriesPharmaceuticals, electronics, apparel, food products, tourism. (2010)
Ease of Doing Business Rank43rd[7]
External
Exports$61.7 billions FOB (2010)
Export goodsChemicals, electronics, rum, beverage concentrates, medical equipment, among others. (2010)
Main export partners United States 90,3 %,
 United Kingdom 1,6 %,
 Dominican Republic 1,4 %,
 Netherlands 1,4 %,
among others. (2010)
Imports$40.8 billions CIF (2010)
Import goodschemicals, machinery and equipment, food, petroleum products, among others. (2010)
Main import partners United States 55 %,
 Ireland 23,7 %,
 Japan 5,4 %,
among others. (2010)
Public finances
Public debtnegative increase $65.2 billions (66% of GDP)[8]
(FY 2010)
RevenuesIncrease $31.3 billions (Consolidated Budget) (FY-2010)
Increase $13.1 billions (Net Revenues, Commonwealth) (FY-2010)[9]
ExpensesDecrease $29.1 billions (Consolidated Budget) (FY-2010)
Decrease $10.2 billions (Commonwealth) (FY-2010
Credit rating
All values, unless otherwise stated, are in US dollars

The Economy of Puerto Rico, according to the World Bank,[12] is a high income economy non-member of the OECD.

Despite its relatively small geographical area and limited availability of natural resources, Puerto Rico's productivity is exceptionally high, having the highest nominal GDP per capita[13] in Latin America, amounting $26,588 dollars in 2011. Also, Puerto Rico has the second most competitive economy among Ibero-American states, only being surpassed by Chile, according to the latest World Economic Forum's Global Competitiveness Report.[14] The commonwealth has modern infrastructure, a large sector public 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, similarly 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 billions-) represented more than $28.7 billion dollars, or approximately 30% of its GDP, while revenues surpassed $31 billions.[15] In 2010, federal transfers amounted $16.710 billions while the Commonwealth's government managed funds of $10.12 billions.

As result of the recent reduction of Spain's credit rating,[10] Puerto Rico holds the second highest credit rating awarded by the agency to a Spanish speaking territory in the long term (BBB+, Stable Steady).

Contents

History

Spanish Colonialism

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.[16]

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.[17]

Per capita Income and GDP per capita

Puerto Rico is the only high-income industrialized economy in Latin America,[18] and exhibits a competitive per capita income to those of Spain and Portugal. Amounting to $26,588 U.S. dollars in 2010, according to statistics from Government Development Bank (GDB) of Puerto Rico, its GDP per capita is the highest in the Caribbean exceeding both Bahamas and Trinidad and Tobago and globally is on par with industrialized economies like Israel, Greece, Portugal, New Zealand and Brunei.

According to the Bureau of Labor Statistics of the Department of Labor of the United States,[19] 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.[20][21]

Current economic overview

Federal transfer payments to Puerto Rico make up more than 20% of the island's personal income.[22] 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.[23] 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. As of 2006, the unemployment rate was 11.7%.Currently the unemployment rate is at 15.9%[24] The U.S. state with the highest unemployment in October 2007 was Michigan, at 7.7%,[25] and the U.S. average was 4.4%.[26] On November 15, 2006 the Legislature of Puerto Rico implemented a 5.5% sales tax.[27] An optional 1-1.5% municipal tax had been in effect since May 2006.

Puerto Rico’s public debt has grown at a faster pace than the growth of its economy, reaching $46.7 billion in 2008.[28] In January 2009, Governor Luis Fortuño enacted several measures aimed at eliminating the government's $3.3 billion deficit.[29] The island unemployment rate is 12% as of November 2009. The rate further dropped to 15.7% in October 2010.[30]

Tourism

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 are 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:

As of April 17, 2012, most of the cruises that visited the island are leaving because of economic reasons,[31] thus affecting foregin and homeport tourists alike.

Trade with the United States

Puerto Rico , reverse side, 2009.jpg

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.[32] 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.[33]

Puerto Rico may collect import duties only to the same degree it taxes the same goods produced domestically.[34]

Puerto Rico receives cross-over subsidies, which generated approximately $371 million in 2008.[35]

Other statistics

  • lowest 10%: NA%
  • highest 10%: NA%
  • revenues: $8.1 billion Central Government, $25 Billion with Public Corporations
  • expenditures: $9.6 billion Central Government
  • production: 23,720 GWh
  • consumption: 22,060 GWh
  • exports: 0 kWh
  • imports: 0 kWh (2007 est.)
  • fossil fuel: 98.06%
  • hydro: 1.96%
  • nuclear: 0%
  • other: 0% (1998)

See also

External links

Notes

  1. ^ a b c Government Development Bank of Puerto Rico. "Puerto Rico Factsheet-2010" (pdf). http://gdbpr.com/economy/documents/2011-Jul-PREcoFactSheet2011-Eng.pdf. Retrieved 25 September 2012. 
  2. ^ a b Junta de Planificación del Gobierno de Puerto Rico. "Aspectos Socioeconómicos de la Economía de Puerto Rico" (in Spanish) (pdf). http://www.jp.gobierno.pr/Portal_JP/Portals/0/ActividadSocioEconomica/ASEPR%20Volumen%20IV%20N%C3%BAmero%205.pdf. Retrieved 25 September 2012. 
  3. ^ [1] Institute of Statistics of the Commonthwealth of Puerto Rico -- Instituto de Estadísticas del Estado Libre Asociado de Puerto Rico.
  4. ^ "Household Income for States: 2009 and 2010" (pdf). http://www.census.gov/prod/2011pubs/acsbr10-02.pdf. Retrieved 25 September 2012. 
  5. ^ a b "Puerto Rico Economy at a Glance". United States Department of Labor. http://www.bls.gov/eag/eag.pr.htm. Retrieved 25 September 2012. 
  6. ^ [2]
  7. ^ "Doing Business in Puerto Rico 2012". World Bank. http://www.doingbusiness.org/data/exploreeconomies/puerto-rico/. Retrieved 25 September 2012. 
  8. ^ "Banco de Desarrollo Gubernamental de Puerto Rico – Gross Public Debt" (pdf). http://gdbpr.com/economy/documents/2011-05-16-AETabla29-2010.pdf. Retrieved 25 September 2012. 
  9. ^ [3]
  10. ^ a b "S&P rebaja el rating de España a "BBB+"" (pdf). Standard and Poors. http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3Dspain_042612.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1244108991042&blobheadervalue3=UTF-8. Retrieved 25 September 2012. 
  11. ^ Moodys Downgrades Puerto Rico Bonds On Economic, Budget Worries
  12. ^ World Bank Indicators, World Bank. "World Bank Indicators 2012: Puerto Rico". http://data.worldbank.org/country/puerto-rico. Retrieved 5 Feb 2012. 
  13. ^ Government Development Bank of Puerto Rico. "Statistical Appendix of the Economic Report for the Governor and Legislative Assembly, May 2011" (in Spanish). http://gdbpr.com/economy/documents/2011-05-16-AE2010_Todas.pdf. Retrieved 5 Feb 2012. 
  14. ^ World Economic Forum (2011). "Global Competitiveness Report 2011-2012". http://www3.weforum.org/docs/WEF_GCR_CompetitivenessIndexRanking_2011-12.pdf. Retrieved 5 Feb 2012. "Puerto Rico's fact sheet at page 300." 
  15. ^ Oficina de Gerencia y Presupuesto del Gobierno de Puerto Rico (2011). "La Economía de Puerto Rico en el Año Fiscal 2010 y Perspectivas Económicas para los Años Fiscales 2011 y 2012" (in Spanish). http://www2.pr.gov/presupuestos/presupuesto2011-2012/Informacin%20de%20Referencia/La%20econom%C3%ADa%20de%20PR.pdf. Retrieved 25 September 2012. 
  16. ^ F. Rivera-Batiz, Island Paradox: Puerto Rico in the 1980s, Chapters 1,2,5 & 8.
  17. ^ "Free-Zone Manufacturing". http://countrystudies.us/dominican-republic/49.htm. Retrieved 25 September 2012. 
  18. ^ World Bank. "Country and Lending Groups - Data". How we classify countries. Country and Lending Groups.. http://data.worldbank.org/about/country-classifications/country-and-lending-groups#High_income. Retrieved 25 September 2012. 
  19. ^ Buró de Estadísticas Laborales del Departamento de Trabajo de los Estados Unidos. "Occupational Employment Statistics, May 2011. Puerto Rico". http://bls.gov/oes/current/oes_pr.htm#00-0000. Retrieved 25 September 2012. 
  20. ^ Departamento de Trabajo de los Estados Unidos. "Minimum wage in U.S. territories". http://www.dol.gov/whd/minwage/america.htm#PuertoRico. Retrieved 25 September 2012. 
  21. ^ Departamento del Trabajo y de Recursos Humanos. Gobierno de Puerto Rico. "Negociiado de Normas de Trabajjo Legiisllaciión Laborall en Acciión" (in Spanish) (pdf). Ley Núm.180 del 27 de julio de 1998. http://www.dtrh.gobierno.pr/pdf/num180.pdf. Retrieved 25 September 2012. 
  22. ^ Trouble on Welfare Island, The Economist, May 25, 2006
  23. ^ "Income - Median Family Income by Family Size". United States Census Bureau. Archived from the original on 2006-04-20. http://web.archive.org/web/20060420031706/http://www.census.gov/hhes/www/income/medincsizeandstate.html. Retrieved 25 September 2012. 
  24. ^ "Unemployment Rate - Puerto Rico - January, 2011". TheLedger.com. http://www.ledgerdata.com/unemployment/puerto-rico/2011/january/. Retrieved 25 September 2012. 
  25. ^ "Unemployment state by state". CNN. http://money.cnn.com/pf/features/lists/state_unemployment/. Retrieved 25 September 2012. 
  26. ^ "Employment Situation Summary". United States Department of Labor. http://www.bls.gov/news.release/empsit.nr0.htm. Retrieved 25 September 2012. 
  27. ^ "Puerto Rico Senate approves sales tax". The Boston Globe. http://articles.boston.com/2006-05-05/news/29240508_1_levy-on-large-corporations-sales-tax-partial-government-shutdown. Retrieved 25 September 2012. 
  28. ^ "Puerto Rico Governor enacts measures to eliminate deficit". The Caribbean News. Archived from the original on 2009-03-03. http://web.archive.org/web/20090303232242/http://caribbeannetnews.com/news-13855--21-21--.html. Retrieved 25 September 2012. 
  29. ^ Puerto Rico gov signs deficit bill. The Bond Buyer
  30. ^ "Local Area Unemployment Statistics". United States Department of Labor. http://www.bls.gov/lau/. Retrieved 25 September 2012. 
  31. ^ "Cruceros abandonan la Isla". http://www.elnuevodia.com/crucerosabandonanlaisla-1238070.html. Retrieved 25 September 2012. 
  32. ^ "Regulation and Clearance from Puerto Rico and the U.S. Virgin Islands to Other Parts of the United States" (pdf). United States Department of Agriculture. http://www.aphis.usda.gov/import_export/plants/manuals/ports/downloads/puerto_rico.pdf. Retrieved 25 September 2012. 
  33. ^ "USPS Administrative Support Manual 274.922 (ASM 13, July 1999)". http://www.npmhu306.org/php/uploads/asm.zip. Retrieved 25 September 2012. 
  34. ^ 48 USC §741a
  35. ^ Matthew Murray (March 1, 2010). "Rum Makers’ Conflict Boiling Over, citing the Congressional Research Service". Roll Call. http://www.rollcall.com/issues/55_95/lobbying/43633-1.html. Retrieved 25 September 2012.