Puerto Rico’s economy continues to suffer from a recession that has now lasted almost a decade, triggered by the expiration of a corporate tax break in 2006 that had seen firms relocate from the mainland. The move exposed the island economy’s other structural flaws and has been accompanied by population outflows. Moreover, years of budget shortfalls have seen government debt rise to $72 billion, roughly 70% of GDP. In our view, the likelihood of a Puerto Rican debt default grows larger as time goes on – though we do not expect it to happen this year. The government is trying to improve control of its finances by passing a balanced budget last year and pushing for the introduction of a VAT. However, we remain of the view that coping with the fiscal crisis amidst the economy’s long-standing under-performance will be an extremely challenging task. We estimate that GDP contracted by 1.3% in 2014 and expect similar falls this year and next before a mild recovery sets in.
- Puerto Rico: The following represents a general Table of Contents outline for the Country Economic Forecast.
- The actual report may cover any or all of the topics listed below. - Highlights and Key Issues - four/five paragraphs of analysis covering the main economic and political issues contained in the subsequent Economic Overview - Forecast Table showing % changes for the country - with 2 years of historical data and 4 years of forecast data for the following: - Domestic demand - Private consumption - Fixed investment - Stockbuilding (% of GDP) - Government consumption - Exports of goods and services - Imports of goods and services - Unemployment - Consumer prices - Current account balance (US$ 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 as: - Contributions to GDP growth - Monthly industrial output - Business and consumer confidence - Unemployment rate - Retail sales - 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 & services exports - latest year