Puerto Rico Planning Board projects steady GNP growth through 2026
The island’s economy grew 2.1% in fiscal 2024, driven by consumption and trade.
Puerto Rico’s economy is expected to maintain moderate growth over the next two fiscal years, according to the latest projections from the Planning Board. Despite signs of a slowdown, the outlook remains positive, with indicators pointing to continued resilience amid global uncertainty.
Planning Board President Héctor Morales-Martínez announced that the island’s gross national product (GNP) is projected to grow by 1.1% in fiscal year 2025 and by 0.5% in fiscal 2026. While that reflects a deceleration from prior years, Morales-Martínez said the economy remains on stable footing. He credited Gov. Jenniffer González’s executive orders aimed at attracting industry and streamlining permitting.
The Planning Board developed a base scenario, as well as optimistic and pessimistic projections. The optimistic case calls for growth of 3.2% in 2025 and 1.6% in 2026, while the pessimistic outlook anticipates a contraction of 1% and 0.4%, respectively. These scenarios account for changing local and global dynamics.
Alejandro Díaz-Marrero, director of the Economic and Social Planning Program, said the board will continue to refine its outlook by monitoring labor market trends, inflation, interest rates, global trade and the impact of geopolitical tensions. He said the island’s reshoring efforts and Executive Order 2025-012 could help insulate the economy from external shocks.
The board uses the Puerto Rico Dynamic Econometric Model to produce its projections. According to Miriam García-Velázquez, director of the Social Analysis, Models and Projections Subprogram, the model factors in several key indicators.
“Different economic assumptions are incorporated into this model to explain the behavior of the projections,” she said. “Among these main assumptions are the following variables: economic behavior in the U.S.; oil prices; the level of investment in construction, investment in machinery and equipment; the amount of federal transfers to individuals; adjusted merchandise exports, personal consumption expenditures, visitor expenditures, population size; and the world economy.”
Sources include the Financial Oversight and Management Board for Puerto Rico, the U.S. Congressional Budget Office, the U.S. Census Bureau, the International Monetary Fund, and the U.S. Energy Information Administration, along with local monthly economic data and social account aggregates from the Planning Board.
In its review of fiscal 2024, the Planning Board reported GNP growth of $1.44 billion, or 2.1%, bringing the total to $69.87 billion. The increase was largely driven by personal consumption and an improvement in foreign trade. Domestic demand reached $96.84 billion, supported by a 2.4% increase in personal consumption expenditures. Within that category, spending on services and nondurable goods rose 2.4% and 4.9%, respectively, while spending on durable goods declined by 7.8%.
Fixed capital investment rose 6.8%, driven by a 17.1% increase in construction and a 1.5% uptick in equipment spending. Both public and private sector investment contributed to the gains. Meanwhile, net exports improved by 21.1%, reflecting a 9.6% increase in goods exports and a 5.5% rise in services exports.
The main contributors to GNP growth in fiscal 2024 were personal consumption expenditures and exports, which added 2.6 and 3.1 percentage points, respectively.
Looking ahead, the Planning Board is also monitoring potential policy impacts from President Donald Trump’s administration. Díaz-Marrero said policies on tariffs, deregulation and fossil fuels could have broad economic implications. As 2025 progresses, he added, “the effects of these international developments are expected to become clearer, allowing for more refined economic analysis.”
The Planning Board’s forecasts are issued under Act 75 of 1975, which requires the agency to continuously assess and update Puerto Rico’s macroeconomic outlook.
