Planning Board report: PR economy declined in FY 2020
By The Star Staff
Puerto Rico’s economy deteriorated in fiscal year (FY) 2020, according to an economic report prepared for Gov. Pedro Pierluisi Urrutia by the Puerto Rico Planning Board and issued Monday.
In FY 2020, the economy of Puerto Rico, measured through the constant gross product (GP), which eliminates inflationary effects, went down by 3.2%, a drop of 5% when compared with FY 2019, the report said.
That result was due to negative performance in different variables including a drop in personal consumption of 9.4%; investment in construction, 37.3%; investment in machinery and equipment, 14.4%; and consumer spending from the government, 0.3%.
At current prices, the GP revision in FYs 2018 and 2019 totaled $67.7 billion and $70.7 billion, or 1.9% and 4.5%, respectively. The GP in FY 2020 was $70.1 billion, a decrease from previous years.
The gross domestic product (GDP) is the most widely used macroeconomic indicator worldwide that reflects economic movement, since it is the most comprehensive measure of an economy’s production of goods and services in a year.
In FY 2020, real GDP closed at $9.2 billion compared with $9.6 billion in FY 2019.
“This represented a reduction of $375.9 million, or 3.9%,” the report said. “In nominal terms, GDP totaled $103.1 billion in FY 2020, which equates to a loss of $1.7 billion, or 1.7% compared to $104.9 billion in the previous fiscal year.”
Industries that reflected increases were: manufacturing, informatics, finance and insurance, administrative services and support, educational services, health and social services, art, and entertainment and recreation.
Personal consumption expenses at current prices totaled $65.1 billion in FY 2020, below the level of FY 2019, which was $66.9 billion, for a decrease of $1.7 billion, or 2.6%. At constant prices, which are prices that are in real value or corrected for changes in prices in relation to a baseline or reference, personal consumption spending in FY 2020 was $8.4 billion, for a decrease of 9.4% compared to FY 2019, when it was $9.3 billion.
Government consumption expenditures are made up of employee compensation and net purchases of goods and services corresponding to the central government and municipalities. In FY 2020, government consumption expenditures reached $7.8 billion at current prices, a decrease of 6.4% or $535.3 million below the level of FY 2019, which was $8.4 billion.
At the level of constant prices, government consumption totaled $1.7 billion, with a reduction of $4.6 million, or 0.3%, compared to the $1.7 billion registered in the previous tax year. The reduction in government consumption expenses at constant prices was mainly due to the reduction in consumption expenses of municipalities.
The total gross domestic investment consists of investment in construction, investment in machinery and equipment, and change in inventories. Total gross domestic investment at current prices totaled $11.8 billion in FY 2020, representing a reduction of $3.1 billion, or 20.9%, when compared with the $15 billion from FY 2019.
Historically, the balance of sales and purchases with the rest of the world has been a very important segment of the GP. In FY 2020, sales of goods and services totaled $73.2 billion at current prices, a decrease of 1.4% or $1 billion from FY 2019.
Exports registered in FY 2020 totaled $62.2 billion, for a reduction of $1.3 billion, or 2.2%, in relation to the $63.6 billion registered in FY 2019. Almost all exports originate in the manufacturing sector, which registered $61 billion in 2020, or 99% of the total value of exports.
Imports in FY 2020 were $44.4 billion, a reduction of $3.4 billion, or 7.1% above the level of $47.7 billion registered in FY 2019. Imports from the United States totaled $22.6 billion, a reduction of $2 billion.