Located between the Caribbean Sea and the North Atlantic Ocean, Puerto Rico is a self governing Commonwealth territory. Dominated by agriculture until the mid 20th century, Puerto Rico’s economy is now largely based on services and manufacturing segments. The island’s mountainous terrain limits agricultural activity, and cattle rearing and dairy farming have replaced sugar production as the major contributors to its agriculture sector.
Significant population growth and insufficient jobs led to large scale emigration of Puerto Ricans to the United States. Tourism and remittances from abroad contribute significantly to Puerto Rico’s economy. The country’s limited natural resources have not been mined due to environmental concerns. The United States is Puerto Rico’s main trading partner and the US minimum wage laws apply in the island nation.
Puerto Rico Economy: GDP and Problems
Puerto Rico’s economic growth has steadily declined since the 1970s, mainly due to the high welfare expenditure of the government and the consequent increase in its fiscal deficit. High unemployment levels also remain a major area of concern. The country’s GDP growth has turned negative in recent years, mainly due to the global economic crisis and the island nation’s close relation with the United States.
The island nation’s real Gross Domestic Product or GDP growth rate has declined from 0.5% in 2006 to -1.8% in 2007, -2.5% in 2008 and -4.5% in 2009. Over 50% of the country’s GDP is contributed by its services segment, while another 45% comes from the industrial segment. Puerto Rico’s agriculture segment constitutes only around 1%-2% of the country’s economic activity.
Puerto Rico’s industrial segment is dominated by several US firms, which set up base in the island nation in response to the various tax exemptions and duty free access provided to them since the 1950s. However, many of these exemptions have been removed in recent years.
Pharmaceuticals, electronics, apparel, food processing, oil refining and the manufacturing of machinery and chemicals are the major industries in Puerto Rico. Tourism and the funds remitted by nearly 2.7 million Puerto Ricans living in the United States are the major source of revenue for this Caribbean nation.
Key Statistics: Puerto Rico Economy
Here are some key statistics relating to Puerto Rico’s economic position
GDP (real growth rate): -4.5% (2009 estimates)
Unemployment rate: 15.3% (2009 figures according to Wikipedia)
Consumer Price inflation : 6.5% (2003 estimate)
Public Debt: $46.7 billion in 2008