PR economy expected to stay positive through FY2027 despite moderate slowdown

By THE STAR STAFF

The island economy is projected to remain in positive territory during fiscal years (FY) 2026 and 2027, even as growth moderates, according to the latest economic outlook released earlier this week by the Puerto Rico Planning Board (JP by its initials in Spanish).

The forecast builds on an estimated 0.4% growth for FY 2025, supported by visitor spending, construction activity and ongoing efforts to diversify the island’s economy. The JP’s econometric model outlines three scenarios: The first is the baseline (conservative) scenario, which calls for a growth rate of 0.4% in FY 2026 and 0.3% in FY 2027. The second scenario is the optimistic one, which calls for up to 2.3% growth in FY 2026 and 1.0% growth in FY 2027, driven by infrastructure projects and a tourism rebound. The adverse scenario consists of a contraction of -1.6% in FY 2026 and -0.5% in FY 2027, reflecting risks such as delays in public investment, higher energy costs and extreme weather events.

“Puerto Rico continues to show resilience despite a volatile global environment and reduced federal funding,” JP Chairman Héctor Morales Martínez said. “Our duty is to provide realistic, transparent, evidence-based analysis.”

The projections rely on the Dynamic Econometric Model of Puerto Rico’s economy, which incorporates key variables such as U.S. economic performance, oil prices, interest rates, construction investment, federal transfers, exports, consumer spending and global trends. Sources include the Financial Oversight and Management Board, Congressional Budget Office, International Monetary Fund and official U.S. agencies.

Tourism and construction remain critical growth engines. Visitor numbers continue to rise, supported by cultural and sporting events and expanded lodging options. Meanwhile, infrastructure projects and post-disaster reconstruction sustain employment and investment. The island government’s reshoring strategy, backed by Executive Order 2025-012, is also spurring manufacturing activity.

However, JP officials cautioned that external factors -- geopolitical tensions, U.S. household income trends, and climate risks -- could alter the outlook.

“Our role is to anticipate scenarios and provide accurate information for decision-making,” said Miriam N. García Velázquez, head of JP’s Social Analysis and Projections unit.

The JB will continue to update its forecasts based on monthly indicators and global developments.

“Our commitment is to deliver rigorous, timely analysis so Puerto Rico can prepare and make informed decisions,” Morales Martínez said.