Country Insights

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Flash report: After four months of negotiations, the government and Minera Panama agree on a new contract
PANAMA - Report 18 Jan 2022
The contract between Minera Panamá, S.A., owner and operator of the largest copper mine in the country, was renegotiated yesterday, after more than four months of discussions between an ad-hoc commission appointed by the Cortizo administration and representatives of the company. The proposal acce...

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GDP grew 25.5% in Q3, anticipating a double-digit growth rate for 2021, but challenges remain, including the pension reform and the GAFI review in February
PANAMA - Report 29 Dec 2021
On December 17, INEC published the GDP results for the third quarter of 2021: a 25.5% growth rate compared to Q3 2020 (reporting nominal activity of US$16,167 million). During Q2, the real growth rate was 40.0%, following a decrease of 8.4% in Q1. Value added in Q3 was US$10,338 million or 14% ab...

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Growth seems to pick up, but differences between the estimates by INEC and the MEF are large
PANAMA - Report 26 Nov 2021
The Monthly Economic Activity Index (IMAE) grew 18% in September compared with the same month of 2020, according to a preliminary (and revisable) information from INEC. Mining, construction (especially public works), retail, the Colon Free Zone, telecommunications, seaports, Panama Canal tolls, p...

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Martinelli was found "not guilty" in the second wiretapping trial
PANAMA - In Brief 10 Nov 2021
Eight months after Ricardo Martinelli concluded his term as President of Panama on June 30, 2015, Panama Attorney General sent the Supreme Court five accusations against him for presumed wiretapping of political enemies, families, and friends. The Attorney argued the President was using sophistic...

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The relevance of mining in recent growth does not correspond to its fiscal importance. The political situation is impeding reforms to the pension program and to exiting the GAFI and EU gray lists.
PANAMA - Report 29 Oct 2021
We discuss four issues in this report: (1) the importance of copper mining, now and in the short term, for the country’s real activity, the balance of payments and government revenues, as compared with the importance of the Panama Canal (ACP); (2) the negative implications of the inclusion of Pan...

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A note on the spike in the recent GDP data: it hides a dismal recovery
PANAMA - Report 01 Oct 2021
The 40.4 percent growth in Q2 (10.0 percent in the first semester) may not be enough to achieve the double-digit performance for the year that some analysts predict. The rebound will face a labor market characterized by increasing unemployment and informality. Only a handful of sectors will reach...

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Economic activity surges, helped by improvement in vaccination coverage. The 2022 budget proposal comes to the legislature for approval with increasing participation of ACP transfers.
PANAMA - Report 31 Aug 2021
IMAE for the second quarter showed an increase of 27%: April grew 21.3% year over year; May registered a 34.2% increase, and June, a 24.9% increase. This result is the consequence of a revision of the previously published IMAE figures: for April, growth was revised from 12.1% to 21.3%, and in May...

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Vaccination is improving, the economy remains on a slow path to recovery, and the dialogue on public pension reform is going nowhere
PANAMA - Report 29 Jul 2021
The total number of vaccines already shipped to the country is 3 million (for a population of 4.3 million inhabitants) and will reach 9.3 million before the end of the year (7.1 million Pfizer, 1.1 million Astra Zeneca, and 1.1 million the Covax system). This new environment may help the health a...

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The political economy of megaprojects in Panama: two recent examples
PANAMA - Report 29 Jun 2021
Economic policy analyses must consider the political forces behind the technical decisions. This fact is relevant in the adjudication of large infrastructure projects, where money and power mingle. Roads, metro rails, and similar large public projects are notable cases. We examine two seminal iss...

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The "rebound effect" versus the "hysteresis effect": The projections for the economy in 2021 are betting on the former, but we analyze the latter
PANAMA - Report 01 Jun 2021
The IMF projects 12% real growth for the year, based on three factors: the vaccination rollout, the private investment recovery, and the "rebound effect" after a 17.9 percent drop in economic activity in 2020. Rating agencies and other international analysts are also projecting double-digit growt...

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Covid-19 eases its grip and the growth outlook improves
PANAMA - Report 30 Apr 2021
So far this year the IMAE is showing a decrease of 9.73% for February and 12.2% during the first two months of the year. We must take this information cum granus salis because, during the first quarter of 2021, most commercial activities were shut down because of the pandemic. In contrast, in 202...

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Five themes relevant to the economic, financial and political perspectives of the country in 2021
PANAMA - Report 25 Mar 2021
We discuss five policy issues that may influence the economic performance of the country in 2021: whether or not the newly published results of 2020 will affect our 4.9% projection for the year, the effects of the most recent downgrade of the sovereign debt, the political economy of the dialogue ...

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From a bright economic history to the current negative narrative: the case of Panama in 2021-2022
PANAMA - Report 01 Mar 2021
February´s IMF country report analyzes the Panamanian economy in the context of the approval of the Precautionary and Liquidity Line (PLL) of US$ 2.7 BB. The IMF usually is bullish concerning Panama, and the document follows that pattern, describing its macroeconomic trajectory and its growth pot...

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Fitch downgraded key Panamanian banks following the Republic's recent assessment and negative valuation of the financial Operating Environment
PANAMA - In Brief 11 Feb 2021
As the result of the February 3 downgrade of Panama's Sovereign risk by Fitch Ratings from BBB to BBB-, the agency downgraded yesterday five important Panamanian banks - including the state-owned Banco Nacional de Panama (BNP). Banco General, the largest private bank in the country, dropped two n...

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We calculate an 18% downturn in the economy for 2020 and a rebound of 4.7% for 2021
PANAMA - Forecast 01 Feb 2021
We calculate a decrease in real economic activity of 18% for 2020. According to our estimations, construction (public and private) and related industries, retail trade, tourism, the Colon Free Zone, international transportation, banking, and energy production accounted for most of the recession. ...