March 2011: A Lost Decade at the Start of the 21st Century

In FY2010, PR experienced its 4th straight year of negative economic growth. This is the worst recession in PR history since the beginning of the national accounts in 1947. In fact, the only period when PR has experienced consecutive years of negative growth in the past was between 1981 and 1983 when GNP shrank annually at 0.6%, 2.6% and 2.6%, respectively. Besides this three-year recession, PR has only had negative growth for single years in 1975 (-3.3%) and again in 2002 (-0.3%). The current recession officially started in FY2007 when real GNP grew at –1.2% and worsened in subsequent years with annual rates of –2.8%, -4.0% (revised) and –3.8% (estimated) between FYs 2007-2010. The hit on the economy has been so hard that real GNP in FY2010 is now 3% below its FY2000 level. This issue reviews the contributions of consumption, investment, government and net exports to the past and future growth of the PR economy.