Puerto Rico’s Economy Continues to Shrink

Puerto Rico’s economy experienced a 3.8% contraction during the first two-thirds of the Commonwealth’s fiscal year compared to the same period during Fiscal Year 2013, according to the insular Government Development Bank.

The territory’s economy has been in recession for six and a half of the last seven and a half years — and expanded only .1% during the 11 months that it grew.

The economy is 13% smaller than it was when the period of decline began. It has now shrunk to its February 1994 level and has only four-fifths of the jobs it had in 2006.

The Commonwealth economy has not been good for even longer. Income growth in the territory has lagged growth in the States for four decades.

The disparity has encouraged millions of Puerto Ricans to leave the territory for the greater opportunities of a State. There are now nearly five million people of Puerto Rican origin in the States, including 1.6 million who were born in the territory, and 3.6 million in Puerto Rico.

The failing Commonwealth economy has also contributed to Puerto Ricans rejecting territory status and choosing statehood among the alternatives through a plebiscite in 2012.

The Government Development bank measures the economy through an index of four factors.

* Year to date non-farm payroll was 1.9% below the year before.

* Cement sales, an indication of construction since most building in Puerto Rico uses concrete, fell 15.6%.

* Electricity generation dropped 3.6%.

* Gasoline consumption was 3.1% less than the year before.

Puerto Rico’s government, through its Planning Board, had initially predicted a .02% expansion this year.  This projection was revised down in November to a contraction of .08%. A leading non-government economist forecast a two-percent economic decline for the fiscal year that ends June 30th. The economy is on track to be worse.

 

 

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