The Foundation for Puerto Rico’s Economy - Financial Oversight and Management Board for Puerto Rico (2024)

From the assembly of printed circuit boards for commercial aircraft engines to the manufacturing of contact lenses, Puerto Rico is home to an array of important manufacturing companies, making the island a significant manufacturing hub in the Americas.

The impact on Puerto Rico’s economy is significant. Currently, manufacturing is the largest industry when it comes to economic activity on the island, representing 43% of Puerto Rico’s Gross Domestic Product (GDP) and producing over $48 billion in 2022.

Manufacturing plants can be found throughout the territory. Collins Aerospace chose the southern municipality of Santa Isabel for its aircraft circuit board manufacturing operation. From Aguadilla, Phoenix Cables provides custom cable assemblies for the military and the aerospace, automotive and medical industries. And the manufacturing plants of dozens of biotechnology corporations are scattered throughout every corner of the island from where hundreds of workers design and build medical devices and other pharmaceutical and agricultural products.

Manufacturing Industries in Puerto Rico. Source: https://www.ddec.pr.gov/industrias

Puerto Rico has been a leading bioscience hub for over 65 years. It is currently the #1 bioscience manufacturing hub in the United States. According to Invest Puerto Rico, 75% of FDA Class III device manufacturers produce their products here. In total, the chemical and allied products manufacturing sub-industry, which includes the bioscience industry, produced close to $29 billion in net income in Puerto Rico in 2022. However, it is not the only manufacturing sub-industry that produces significant revenue on the island, while having a meaningful impact on Puerto Rico’s economy.

Machinery manufacturing produced $273 million in net income in 2022 and experienced a net income growth of 101% since 2018. The apparel and related products sub-industry on the island almost doubled its net income between 2018 and 2022. Other sub-industries that experienced significant net income growth over this period include textile mill products (66% growth), wood products (64% growth) and fabricated metal products (49% growth).

Another industry that currently has a significant impact on Puerto Rico’s GDP is real estate and rental properties, which represents 19% of the island’s GDP, an increase of 28% in 5 years. According to real estate experts, the growth could be attributed to an influx of people who have moved to the island either to take advantage of tax incentives or because the companies they work for now allow employees to work remotely as a result of the COVD-19 pandemic lockdowns. Part of the 28% increase could also be due to the subsequent increase in home prices and rental rates on the island. Real estate and rental properties on the island currently contribute over $21 billion to Puerto Rico’s GDP.

However, it is unclear how long this trend of increased home prices and sales will continue. According to data published by the Office of the Commissioner of Financial Institutions of Puerto Rico, the total number of properties sold on the island fell between 2021 and 2022, and there were less sales of homes during the first quarter of 2023 when compared to the first quarter of 2022.

While Puerto Rico’s tropical climate, sandy beaches and thriving culture attract close to a million visitors each year, tourism is not a leader when it comes to economic activity on the island. Despite a popular belief that tourism is a significant contributor, this industry only represents about 2% of the island’s GDP. That share has grown 1% over the last 5 years, which is significantly less than the 15% growth reported within the industry during the same period in the mainland United States.