Puerto Rico Planning Board forecasts economic growth for 2024, 2025
The Puerto Rico Planning Board forecasts sustained economic growth of 2.8% for fiscal year 2024 and 1.4% for 2025, announced the agency’s president, Julio Lassús-Ruiz.
“The projections are based, among other variables, on the slowdown in inflation and the increase in the disbursement of federal funds,” said Lassús-Ruiz. “The main variables of the projections include reconstruction funds, the significant reduction of inflation, and credits for work and for dependent children.”
Fiscal year 2024’s projected 2.8% growth is buoyed by a 21.2% increase in Community Development Block Grant (CDBG) Program funds, totaling $1.8 billion, which is $326 million more than the previous year. Inflation is expected to stabilize at 2%, down from 3.3% in fiscal year 2023, Lassús-Ruiz added.
“Other factors that have contributed positively to the economy have been the credits from the ARPA Act, work credits and credit for dependent children,” Lassús-Ruiz said. “The projection for fiscal year 2025 is a growth of 1.4% in the base scenario.”
“This projection is supported by an increase in federal disbursements in CDBG funds that totaled $2.05 billion. This would represent an increase of 10.6%, or $196 million, over fiscal year 2024. Another indicator that contributes to growth in fiscal year 2025 is a decelerating inflation of 1.4% over fiscal year 2024,” he said.
The Planning Board analyzes both optimistic and pessimistic scenarios alongside the base forecast, predicting growths of 3.2% and 2.4% for 2024 and 2025 under the optimistic scenario, and 2.4% and 0.3% under the pessimistic scenario, respectively.
Board’s projected economic for 2023 is confirmed
Puerto Rico’s economy, measured by gross product (GDP) at constant prices, grew 0.7% in fiscal year 2023, compared to fiscal year 2022, the board said.
“This growth is mainly attributed to an increase in exports of goods and services, 12.7%; imports of goods and services, 5.6%; personal consumption expenditures, 3.2%; total domestic fixed capital investment, 2.8%; and government consumption expenditures, 0.3 %,” Lassus-Ruiz said.
The constant GDP estimates for fiscal years 2021 and 2022 were revised, for growth of 1.4% and 3.8% respectively. At current prices, GDP in fiscal year 2023 rose 3.9%. The revisions to the current GDP estimates for fiscal years 2021 and 2022 were 7.0% and 4.1%, respectively.
In 2023, personal consumption at current prices rose by $5.7 billion, or 6.3%, with durable and nondurable goods accounting for 58.9% of expenditures. Household operation, clothing, accessories, and medical and funeral services were significant contributors to personal spending, which comprised 85.1% of real domestic demand.
Gross domestic fixed capital investment increased by 2.8% due to growth in construction and machinery investment. Sales and purchases of goods and services also saw increases, totaling $75.6 billion and $113.4 billion, respectively.
Increase in manufacturing and exports
Manufacturing and exports experienced growth, with exports reaching $63.6 billion, an increase of 6.5% from the previous year.
“Most exports originate from the manufacturing industry, especially pharmaceutical chemicals and medicines, which reached a value of $46.6 billion,” Lassus-Ruiz said.
The GDP at current prices was $118 billion in fiscal year 2023, marking a 3.8% increase. Manufacturing, real estate and income were the leading GDP components.
The Planning Board’s economic forecasts are based on the Dynamic Econometric Model of the Puerto Rico Economy, taking into account factors like U.S. economic growth, oil prices, investment levels, federal transfers, population size and global economic conditions.
Sources include fiscal plans from the Financial Oversight and Management Board for Puerto Rico, the Congressional Budget Office, the U.S. Census Bureau, the International Monetary Fund, and the U.S. Office of Energy, alongside data from the 2023 social accounts produced by the Planning Board.
