External Trade

  • External trade is a key driver of Puerto Rico’s economy, with exports and imports of merchandise representing well over 100% of the island’s GDP.
  • The main export market continues to be the Mainland, followed by Europe.
  • On an accumulated basis (Up to August, last month for which there is information), exports of merchandise increased at an annual rate of 5.9%, led by a strong growth of pharmaceuticals, and imports declined 3.6%, as local consumption is still not recuperating.

Overview and recent trends

Data available up to August reflects that the value of exports rose 5.9%, while that of imports declined 4.0%. It represents, on the export side, a favorable change as exports fell in calendar 2011 to their lowest level since 2005.

By markets, besides the Mainland the second most important market is Germany, followed by the Netherlands. Shipments to the Mainland accounted for 72% of total exports, with the rest going to foreign countries. As with the Mainland, trade with Europe is dominated by the exports and imports of pharmaceuticals, which account for 70% of total exports.

Exports of merchandise are concentrated in pharmaceuticals products, which represent 70% of the total, with most of the production destined to the Mainland, followed by medical equipment and supplies products, with 7% of the total. Exports of pharmaceutical and medical products increased 9.2% so far in 2012. On the other hand, imports of these products declined 7.2%, which could point to a slowdown in production further on.

Outlook

With respect to short-term trends, it can be expected that as U.S. manufacturing is recuperating, it could provide an impetus to local production. The impact of that development, though, is limited by the fact that the great majority of P.R.’s exports consist of pharmaceuticals, less sensitive to this cycle. Expect then a continuation of trends for the balance of the year.

1. Trade data of Puerto Rico with foreign countries is underestimated since it does not include the value of exports shipped through the United States to these countries.