Economists Warn Puerto Rico Faces Near-Zero Growth in 2026

Puerto Rico Economy Faces Near-Zero Growth in 2026

Puerto Rico's leading economists are warning that the island's economy is headed for near-zero growth in 2026, as a combination of external pressures largely beyond the island's control converge to stifle economic momentum. José Joaquín Villamil, chairman and CEO of Estudios Técnicos Inc. — one of Puerto Rico's most respected economic analysis firms — described the task of assessing the island's economic trajectory as "unusually difficult" given the extreme sensitivity of Puerto Rico's economy to shifting federal policies.

Growth Projections and Their Causes

Estudios Técnicos projects gross national product growth of approximately 1% for 2025, falling to close to 0% for 2026. The Puerto Rico Planning Board's projections are broadly aligned. Villamil described the current situation bluntly: "It is an economy that is not doing well." The island has not experienced sustained economic growth in the 4% to 5% range in many years, having navigated a decade-long fiscal crisis, the PROMESA debt restructuring process, the devastation of Hurricane Maria in 2017, the COVID-19 pandemic, and Hurricane Fiona in 2022. Trump administration tariff policies have pushed up prices for food and durable goods, contributing to stagnating or declining retail sales as households shift toward lower-cost alternatives. "The problem is that there is so much uncertainty due to Trump's policies," said Villamil. Analyst Martínez added: "What people are feeling is not positive — a shrinking of the economy and a period of tough financial planning at the individual level."

Bright Spots: Tourism, Manufacturing, and Tech

Despite the challenging overall picture, several sectors continue to show genuine strength. Tourism has broken consecutive annual records, generating over $1.7 billion in lodging revenue in 2025. Pharmaceutical manufacturing exports remain robust. Technology sector investment is growing, supported by Act 60 tax incentives, and the Puerto Rico Science, Technology and Research Trust received a $9.5 million allocation to support innovation-driven economic development. These sectors represent the foundation on which Puerto Rico's long-term economic recovery will need to be built.