Over the past decade, Puerto Rico has faced a significant decline in its level of economic activity, primarily attributed to economic depression and fiscal issues within the Commonwealth. The situation was further exacerbated by devastating hurricanes and the ongoing COVID-19 pandemic, which pushed the economy to an all-time low.
However, since June 2020, Puerto Rico has experienced a steady and noteworthy resurgence in economic activity. This remarkable turnaround can be attributed to two key factors. Firstly, government spending injected a substantial amount of cash into the hands of consumers, enabling them to spend once government restrictions were lifted. Secondly, consumers benefited from positive developments such as a labor market that favored higher wages and better benefits, an increasing interest in entrepreneurship, and government incentives that bolstered their purchasing power.
Although there was a minor setback in 2022 due to concerns about recession and inflation, the economy rebounded and continued to grow as it entered 2023. The Economic Development Bank’s Economic Activity Index reveals that in May 2023, there was a year-over-year increase of 1.9% and a month-over-month increase of 0.8%. Furthermore, when comparing year-over-year growth in quarters, the average growth rate over time was found to be 2.9%. Remarkably, the levels of the Economic Activity Index in May 2023 are comparable to those observed in 2015, indicating a significant recovery and progress in Puerto Rico’s economic performance. These positive trends offer promising prospects for the island’s economic future.
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