SAN JUAN – Puerto Rico’s economy continued to contract in the first eight months of the current fiscal year (July 2013-February 2014), shrinking 3.8 percent relative to the same period of the previous 12-month accounting cycle, the island’s Government Development Bank (GDBPR) said.
The bank said that the U.S. commonwealth’s economy shrank 2.4 percent in February compared to the same month of 2013, noting that the contraction was lower last month than the 3.4 percent annual gross domestic product decline in January.
The GDBPR said non-agricultural employment inched up 0.1 percent in February – thanks to a 1.5 percent rise in private-sector job gains, which offset a 2.2 percent decline in the public sector – but fell 1.9 percent in the first eight months of the current fiscal year.
Electrical-energy production (an indicator of business activity) fell 2.2 percent in February and 3.6 percent over the eight-month period, while gasoline consumption (a reflection of the economic activity of households and individuals) fell 6.4 percent and 3.1 percent, respectively.
Cement sales, a key indicator of investment in housing construction and infrastructure, plunged 12.7 percent in February and 15.6 percent in the first eight months of the current fiscal year.
Puerto Rico is the midst of its eighth year of recession and double-digit unemployment and has more than $70 billion in debt, equivalent to roughly 70 percent of the island’s GDP.
The island’s economy has contracted nearly 13 percent since 2006 and is suffering from a severe population exodus, a very low labor force participation rate and high crime, all of which are hindering a potential economic recovery.
The U.S. commonwealth’s economy also is being adversely affected by high energy prices.
Gov. Alejandro Garcia Padilla’s administration has responded with a series of austerity measures to close Puerto Rico’s budget gap, including pension cuts, tax hikes and reduced government spending.
Adding to the island’s economic woes, all of the big three ratings agencies – Standard & Poor’s, Moody’s and Fitch – have downgraded Puerto Rico’s debt to junk status this year.