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A brief economic outlook of 2024

Intelligent Economics > Analysis > A brief economic outlook of 2024

As we transition to the new year, and the business sector has begun to make plans and budgets for the
new year. The Intelligent Economics team is ready to provide the data and economic analysis you need
to support your business decisions. The starting point of our analysis and vision for 2024 suggests that,
as we approach the fourth anniversary of Covid-19 and the injection of $20 billion in federal stimulus,
the economy will enter a normalization phase.

We recommend our clients to monitor closely the economic trends during this normalization process, as
significant corrections may occur in certain productive sectors. Already during the fourth quarter of
2023, business bankruptcies are showing an upward trend.

The Real Gross National Product (GNP) will experience growth between 1.2% and 1.8%, and the labor
market will remain robust and dynamic. It is highly likely that the government will approve the third
minimum wage increase in the summer, raising it to $10.50. This should encourage more people to join
the labor market but will create pressures on businesses’ operational costs. The unemployment rate
closed at historically low levels in modern Puerto Rican history, between 6% and 6.5%, while the labor
force participation rate continues to rise, reaching 44%.

Inflation will continue to cool down, and by the second half of 2024, it should return to the normal level
of between 2% and 2.5%. However, food prices will not revert to their normal levels until at least the
first half of 2025, largely due to the structural imbalance in the global market, the effects of two wars,
and global warming.

Retail consumption, which has been displaying weakness since October, should undergo a gradual correction during the first quarter of 2024. Regarding the consumption of durable goods, home sales are
already experiencing weakness due to high interest rates and limited housing supply. Surprisingly, in
2024, 128,000 new cars were sold, surpassing the sales of 2023, which amounted to 121,000.

As for tourism, it is expected to maintain the dynamism seen in the arrival of visitors to the island
recently During 2023, the airport received 12 million passengers, and the total number of tourists
reached three million, maintaining a stable occupancy rate in the range of 65% – 70%. Projections from
“Discover Puerto Rico” indicate a 30% increase in hotel registrations compared to the first quarter of

Finally, elections in the United States and Puerto Rico will be factors that can impact the performance of
the economy. Nationally, a potential victory for the Republican Party may affect the disbursement of the
reconstruction funds needed by the island. Meanwhile, a change in government at the local level could
impact the continuity of projects and the necessary institutional stability to sustain economic recovery.

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