Chart 1. Puerto Rico: Contributions to Percentage Change in Real GDP.
Real gross domestic product (GDP) grew 0.3% in 2019 after declining 2.4% in 2018, according to estimates released by the Bureau of Economic Analysis (BEA). The published statistics are the first official publication of the BEA’s GDP for Puerto Rico.
The publication includes updated estimates for 2012 to 2018 that incorporate new and additional source data and methodological improvements to the prototype GDP statistics that were released in September 2020, as News is my Business reported.
The increase in real GDP in 2019 reflects an increase in exports. Although private investment in inventories, government spending, and consumer spending declined, these declines were more than offset by lower imports, which is a subtraction item in the calculation of GDP.
Pharmaceuticals and organic chemicals were the main contributors to both the growth in exports and the decline in imports in 2019. Exports increased by 0.7%, while imports decreased by 9.1 %. The chemical manufacturing industry, which includes pharmaceutical manufacturers, was the main contributor to the decline in private investment in inventories.
Government spending fell 11.4% in 2019 as spending on disaster recovery activities slowed. The biggest drop was recorded in gross investments in central government structures, as major repairs to the power grid, damaged in 2017 by Hurricanes Irma and Maria, were completed in 2018.
Consumer spending fell 0.5% in 2019. Durable goods purchases fell 3.6%, while catastrophe insurance payments and government payments to households, which supported spending by consumption in 2018, decreased.
Puerto Rico’s GDP includes output owned by non-residents, such as multinational non-resident companies. In Puerto Rico, subsidiaries of large multinational non-resident companies operate in the pharmaceutical manufacturing industry, as well as the medical device manufacturing and computer services industries.
As part of the transition from the prototype to official statistics, the BEA is instituting a routine publication and update cycle for these estimates, like other BEA data products, he said.
Much of the source data that the BEA uses to prepare Puerto Rico’s GDP estimates are drawn from administrative or survey data which, over time, will provide more complete or relevant information, the agency noted.
Because Puerto Rico is not included in most of the major surveys used by the BEA to estimate the national GDP of the United States, it relied on a number of local government agencies, namely: the Bank of Puerto Rico Economic Development, Office of Economic Studies; the Puerto Rico Insurance Commissioner’s Office; the Ministry of Economic Development and Trade; the Treasury Department; Puerto Rico Electric Power Authority; the Puerto Rico Industrial Development Corporation; the Puerto Rico Institute of Statistics; and the Puerto Rico Planning Council.