Country Report Puerto Rico
- ID: 2138738
- May 2016
- Region: Puerto Rico
- 17 Pages
- The Economist Intelligence Unit
The Puerto Rico Planning Board expects the island's real gross national product (GNP) to decline by between 1.2% and 2% in the 2015/16 fiscal year, which runs until the end of June, and is now projecting a further decline of between 2% and 3% in the 2016/17 fiscal year.
The Planning Board produces official forecasts for the government to support the annual budgeting process. The island's economy has been in an almost continuous downturn since the 2006/07 fiscal year, resulting in a cumulative drop of 14%. It is not common for the Planning Board to paint a bleak outlook in the official projections, but the government's deepening fiscal crisis, which has already caused several separate instances of default in the servicing of Puerto Rico's US$72bn public debt (over 100% of GNP), is expected to continue to apply downward pressure on economic activity.
For fiscal year 2016/17, the Planning Board assumes that government spending will be cut by US$700m as fiscal tightening continues amid a liquidity crunch in the central public administration. The authorities have recently warned that police cars could be grounded owing to the lack funds to pay for fuel.