Economist Intelligence Unit: Puerto Rico

Economist Intelligence Unit: Puerto Rico

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Monthly highlights

The governor, Luis Fortuño, of the Partido Nuevo Progresista (PNP), will attempt to shift his administration's focus from fiscal austerity to tax cuts and stimulus spending in an effort to kick-start the economy and round up political support ahead of the 2012 general election. However, he will be challenged by increasing public dissatisfaction stemming from persistent high unemployment, a deteriorating security situation, and corruption allegations against PNP members. This will boost the opposition, which has endorsed Alejandro García Padilla, a young senator from the centre-left Partido Popular Democrático (PPD), as a contender for governor in the 2012 election. Efforts to put the public finances on a sound footing will be buoyed in the short term by a special tax on foreign corporations, but the government risks an exodus of these companies and a medium-term decline of the manufacturing exports sector. Owing to a weak recovery in the US, the Economist Intelligence Unit estimates a fifth consecutive year of recession in the 2010/11 fiscal year (July-June), with GDP falling by 1.7%. But as a result of the more pessimistic global economic outlook in 2012, we expect weak growth in fiscal year 2011/12 of just 0.5%.

Economic growth

Economic growth

(% unless otherwise indicated)
	2014	2015	2016
US GDP	2.2	2.3	2.3
OECD GDP	2.1	2.2	2.2
World GDP	2.9	3.1	3.0
World trade	6.2	6.5	6.5
Source: Economist Intelligence Unit

Inflation indicators

Inflation indicators

(% unless otherwise indicated)
	2014	2015	2016
US CPI	2.1	2.2	2.2
OECD CPI	2.2	2.2	2.3
Manufactures (measured in US$)	1.5	1.8	1.9
Oil (Brent; US$/b)	108.3	104.0	110.0
Non-oil commodities (measured in US$)	-3.6	3.4	2.8
Source: Economist Intelligence Unit

Financial variables

Financial variables

(% unless otherwise indicated)
	2014	2015	2016
US$ 3-month commercial paper rate (av; %)	0.3	1.2	2.6
¥ 3-month money market rate (av; %)	0.9	1.3	1.5
¥:US$ (av)	81.0	82.0	83.0
Rmb:US$ (av)	6.09	5.98	5.87
Source: Economist Intelligence Unit

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