Puerto Rico's debt saga continues. As expected, the US territory failed to pay its creditors nearly US$1bn in July 2016. Governor Ricardo Rossello, who took office at the beginning of January 2017, has pledged to work with bondholders and federal overseers. He is now tasked to present a new fiscal plan by the end of January but has been pleading for an extension.
Once a booming manufacturing hub for the US mainland, Puerto Rico fell into recession twelve years ago and is still struggling to resolve its economic problems. Moreover, we expect the contraction to persist for a few more years yet, as the government continues to deal with its crippling debt (more than US$70bn). By 2019 we estimate that the territory's real GDP will be 12% smaller than in 2004.
As a US territory the island does not have access to federal bankruptcy courts like US states. The US Congress therefore passed the Puerto Rico Oversight, Management, and Economic Stability Act in June 2016 just before a nearly US$1bn debt payment was due. The rescue law includes a provision which prevents creditors from suing Puerto Rico over missed debt payments until mid-February 2017 and led to the creation of a federal oversight board tasked with managing the island's fiscal crisis.
But Puerto Rico's problems go beyond debt. Between 2005 and 2015, almost 10% of the population left the island.
Table Of Contents
Country Economic Forecasts > Puerto Rico Puerto Ricoand#58;
The following represents a general Table of Contents outline for the Country Economic Forecast. The actual report may cover any or all of the topics listed below.
Highlights and Key Issues - four/five paragraphs of analysis covering the main economic and political issues contained in the subsequent Economic Overview
Forecast Table showing % changes for the country - with 2 years of historical data and 4 years of forecast data for the followingand#58;
Stockbuilding (% of GDP)
Exports of goods and services
Imports of goods and services
Current account balance (US$ and % of GDP)
Government budget (% of GDP)
Short-term interest rates (%)
Long-term interest rates (%)
Exchange rate (vs. US dollar)
Exchange rate (vs. euro)
Economic Overview - two pages of events-driven analysis highlighting the most recent economic activity and, where relevant, political developments of the country, detailing significant changes to Oxford Economics' forecasts
Charts and Tables - covering a full range of economic developments relevant to the time period covered. These could include such topics asand#58;
Contributions to GDP growth
Monthly industrial output
Business and consumer confidence
Prices and earnings
Consumption and investment
Government balance and debt
GDP and industrial production
Monetary policy and bond yields
Background Information on the country
One or two pages of text covering the main historical political and economic factors that determine the country's current position
Key Facts on the country
Map of the country
Key political facts
Long-term economic and social development - changes since 1980
Structure of GDP by output - latest year
Long-term sovereign credit ratings and outlook
Corruption perceptions index- latest year
Structural economic indicators - changes since 1990
Destination of goods' exports -prior years - latest year
Composition of goods andamp; services exports - latest year