Puerto Rico

Puerto Rico emerged from the largest municipal bankruptcy in American history ($123 billion in liabilities) to achieve something unexpected: economic growth. After nearly two decades of decline, hurricanes, and debt restructuring, real GDP increased 3.0% in 2023. Unemployment fell to a historic low of 5.3%, manufacturing employment stabilized at 82,600, and a 2022 court-approved plan reduced debt by 80% to around $37 billion, saving $50 billion in future payments.

Pharmaceuticals anchor the economy: Puerto Rico produced $20.2 billion in pharmaceutical exports in 2024—17.6% of total US pharmaceutical exports from an island smaller than Connecticut. The industry benefits from tax incentives, skilled labor, and strategic Caribbean location. With tariffs potentially reshoring production from abroad, Puerto Rico pitches itself as the domestic alternative for pharma and medical devices.

Yet the territory remains in fiscal supervision. The Fiscal Oversight Board, imposed by Congress in 2016, continues to control budgets; in June 2025, the Puerto Rico Senate demanded its dissolution. The electric utility PREPA still carries $11 billion in bonds that may prove worthless. A new 4% tax on individual beneficiaries of Law 60 incentives signals the government's ambivalence about tax haven status. Puerto Rico demonstrates recovery is possible after catastrophic fiscal failure, but the structural relationship with the mainland—taxable enough to burden, not integrated enough to benefit—creates persistent vulnerability. Tourism set records in 2024, yet young Puerto Ricans continue emigrating to Florida and Texas.