Puerto Rico’s GDP up 4% in 2021, after 6.2% drop in 2020
Puerto Rico’s real gross domestic product (GDP) increased 4% in 2021 after decreasing 6.2% in 2020, according to statistics released by the U.S. Bureau of Economic Analysis (BEA).
The increase in real GDP in 2021 primarily reflected an increase in personal consumption expenditures. Private fixed investment also increased. These increases were partly offset by decreases in exports, private inventory investment and government spending. Imports, which the BEA explained is a subtraction item in the calculation of GDP, increased.
In its report, the BEA discussed the impact of the COVID-19 pandemic on the 2021 Puerto Rico GDP estimate, saying central and municipal governments and consumers were supported by federal payments authorized by the Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020; the Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act of 2021; and the American Rescue Plan Act of 2021.
“Expenditures funded by these payments are reflected in the GDP estimates. However, the full effects of the pandemic cannot be quantified in BEA statistics for Puerto Rico because the impacts are generally embedded in the data sources used to estimate the components of GDP,” the BEA stated in its report.
Real personal consumption expenditures (PCE) increased 11.2%. The segment was supported by government assistance payments distributed to households through the CARES Act, the CRRSA Act and the American Rescue Plan Act. PCE goods increased 17.1% and spending on services increased 11.6%.
These increases were partly offset by “net foreign travel,” which equals foreign travel expenditures by Puerto Rico residents less expenditures in Puerto Rico by nonresidents.
PCE goods and PCE services include spending in Puerto Rico by residents and nonresidents (for example, tourists); nonresident spending is subtracted through the estimates of “net foreign travel,” so the PCE aggregate reflects only spending by Puerto Rico residents.
- The increase in PCE goods reflected widespread growth across both nondurable and durable goods. According to statistics published by the Puerto Rico Economic Development Bank (EDB), unit sales of motor vehicles increased 35.9%.
- Within PCE services, the leading contributor to the increase was food services and accommodations. According to statistics published by the EDB, total hotel (including small inns, or “paradores”) registrations increased 103.7%.
- Net foreign travel subtracted from PCE growth as nonresident spending on PCE goods and PCE services in Puerto Rico increased.
Real private fixed investment (PFI) increased 4%, reflecting increases in equipment investment and structures investment. Spending on PFI equipment increased 17.5% and spending on PFI structures increased 25.5%. The increases were partly offset by a decrease in intellectual property products, the agency noted.
- The leading contributor to the increase in equipment was transportation equipment, including purchases of motor vehicles by businesses.
- The leading contributor to the increase in structures was nonresidential structures, reflecting ongoing projects to improve telecommunications infrastructure and hotel and lodging establishments.
Real exports decreased 1.9%, reflecting a decrease in exports of goods that was partly offset by an increase in exports of services. Exports of goods decreased 5.1%, while exports of services increased 15.4%.
- The leading contributor to the decrease in exports of goods was pharmaceuticals and organic chemicals. Data from U.S. Census Bureau “U.S. Trade with Puerto Rico and U.S. Possessions” reports and the USA Trade Online database indicate the value of pharmaceutical products and organic chemicals shipped from Puerto Rico was 5.5% lower in 2021 than in 2020.
- The leading contributor to the increase in exports of services was travel services, which includes goods and services purchased by nonresidents in Puerto Rico. Exports of travel services increased 125.1%, largely reflecting increases in expenditures by air visitors. According to statistics published by the EDB, total inbound air passengers increased 103.9% in 2021.
Real imports increased 2.5%, reflecting an increase in imports of goods, the agency said.
- The leading contributor to the increase in imports of goods was transportation equipment. Imports of transportation equipment, which includes motor vehicles, increased 42.4%. Unit sales of motor vehicles showed substantial growth in 2021.
- Imports of pharmaceuticals and organic chemicals decreased 8.6%, partly offsetting growth in other categories of imports. Data show that the value of pharmaceutical products and organic chemicals shipped to Puerto Rico was 6.3% lower in 2021 than in 2020.
Real government spending decreased 0.4%, reflecting drops in spending by the federal government and municipal governments. Federal government spending decreased 3%, reflecting declines in disaster recovery activities associated with the 2017 hurricanes. Municipal government spending decreased 3.5%, following continued declines in appropriations from the commonwealth government.
Central government spending increased 1.4%, supported by payments from the CARES Act, the CRRSA Act, and the American Rescue Plan Act, the BEA said.
“Due to lags in the availability of key data sources used in the estimation of Puerto Rico GDP, the statistics presented today for 2021 are preliminary estimates,” the agency stated. “For example, currently available data sources for central government spending and private inventory investment do not cover all of calendar year 2021. As additional source data become available, BEA will incorporate the information and will release updated estimates once a year.”
