Puerto Rico has faced significant economic hardships in recent years that have hampered growth and prosperity on the island. The territory is still recovering from the devastating effects of Hurricane Maria in 2017, which caused an estimated $90 billion in damages. Maria exposed the vulnerabilities and deficiencies in Puerto Rico’s infrastructure, which were already weakened by a decade-long recession. Restoring basic services like power and clean water took months in some areas after the storm.
The hurricane further exacerbated Puerto Rico’s crippling debt crisis. At the time, the commonwealth owed over $70 billion to creditors and had declared the largest municipal bankruptcy in U.S. history in 2016. The massive costs of rebuilding infrastructure and assisting displaced residents stretched Puerto Rico’s already stressed finances to the breaking point. However, the federal response to Maria brought some relief, with over $50 billion allocated for recovery efforts. A portion of Puerto Rico’s debt was also forgiven through the bankruptcy process.
While progress has certainly been made since 2017, full recovery will be a long-term endeavor. As of early 2022, some rural areas still lacked full power restoration over four years later. Unemployment also remains stubbornly high at around 6%, compared to 4% nationally, and the population continues to shrink as Puerto Ricans leave for opportunities on the mainland. The energy grid also remains vulnerable to future storms. To address these challenges, Puerto Rico is working to modernize and “hurricane-proof” critical infrastructure through projects funded by federal recovery aid.
Diversifying Puerto Rico’s economy away from its historical reliance on manufacturing is also a long-term priority. Tourism is being emphasized and developed as a major industry, with efforts to promote cultural attractions and eco-tourism. The territory is also trying to establish itself as a hub for emerging sectors like aerospace and pharmaceuticals through targeted tax incentives. However, high operating costs and a complicated regulatory environment have hampered business growth. If Puerto Rico can continue to rebuild stronger, while also implementing business-friendly reforms, it has potential to create a more resilient and prosperous future for the island.
