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COUNTRY INSIGHTS

The Year of Living Dangerously: Slower growth, higher unemployment…and Odebrecht
PANAMA · Report · 30 Dec 2016

Real GDP growth fell to 4.8% y/y in Q3 compared to its reported 5.2% growth during the previous quarter. We expect 2016 y/y GDP growth rate to be around 5% based on results up to Q3 (4.9%). We see no reason for a rebound in Q4, and indicators continue to suggest a growth rate below the 6% estimat...

Trump Possible Bad News for Canal, and Exports
PANAMA · Report · 30 Nov 2016

The question every analyst asks these days is how the Trump administration might affect Panama. Though the link between the U.S. and Panamanian economies is one of the weakest in the region, a likely surge of protectionism will hit services exports, and Canal traffic. Other potential impac...

As World Trade Slows, Canal Offers a New Strategic Approach
PANAMA · Report · 01 Nov 2016

Business headlines over the past two weeks have focused on the pros and cons of the Corozal container terminal on the southeast shore of the Panama Canal, a project promoted by the Panama Canal Authority (ACP). Corozal is already in the pre-contracting phase (four international firms have shown i...

Growth reaches 4.9% in H1 forces weakens prospects for the rest of the year
PANAMA · Report · 30 Sep 2016

Real GDP grew 5.2% y/y in Q2 compared to 4.6% in Q1; growth in H1 was 4.9%, which suggests a growth rate for 2016 below the 6% estimates of the Panamanian Government and international agencies. The leading sectors were: electricity, gas and water supply; mining, construction and financial interme...

Fallout from the Stiglitz-Pieth Disaster
PANAMA · Report · 31 Aug 2016

The financial sector is in the midst of non-friendly fire from abroad. The resignations of renowned economist Joseph Stiglitz and anti-corruption expert Mark Pieth from an ad-hoc commission appointed by President Varela to recommend changes in Panamanian transparency laws was a PR catastrophe. ...

The Morning After: The Panama Papers, the Waked Affair and the Challenges to the Banking Sector
PANAMA · Report · 31 Jul 2016

The Monthly Economic Activity Index climbed by a surprising 5.2% y/y in May, and 4.2% for the first five months of the year, compared with the same period in 2015. That’s good news, coming on the heels of the Panama Papers and Waked Affair scandals, though the IMAE continues to show a persistent ...

Speed bumps ahead…for a while
PANAMA · Forecast · 24 Jun 2016

Real GDP expanded 4.58% in Q1, down from the 6.2% growth of Q1 2015, and far below the finance minister’s 5.7% growth projection. Electricity, gas and water supply, construction, mining, and social services were the fastest-growing sectors in Q1, according to these official figures, while agricul...

The Perfect Storm: The Panama Papers, The Waked Affair and The Economic Slowdown
PANAMA · Report · 23 May 2016

In our last report, we discussed the potential implications of the Panama Papers (part I of the Mossack & Fonseca documents leak). We argued that the expected slowdown of international legal services in Panama was equivalent to a “permanent demand shock to the service sector, that will affect the...

Is the Game Over? The Implications of the Panama Papers
PANAMA · Report · 05 Apr 2016

A topic we’ve discussed in recent months in this forum appeared this weekend in world news as the “Panama Papers” – the role of a Panamanian law firm in supplying corporations in different jurisdictions to parties managing funds of dubious sources. To move funds, supposedly, to avoid paying taxes...

Meeting the New Challenges
PANAMA · Report · 24 Mar 2016

The IMF’s Article IV report published on March 19th is in tune with our concerns and perspectives in regards to macroeconomic conditions: strong growth projections remain in place (around 5.9%-6% for 2016); the fiscal deficit in 2015 was 2.8% of GDP not the 2.0% that the MEF reported after the “a...

Unraveling the Fiscal Accounts and Interpreting the Economic Indicators
PANAMA · Report · 19 Feb 2016 · 1 response

Fiscal results presented by the Ministry of Economy and Finance (MEF) show two issues that do not properly allow grasping Panama’s real fiscal stance: the notion of adjusted deficit and the impact of turnkey projects. Moreover, nominal GDP estimated by the MEF for 2015 is under scrutiny, since it...

Projections stand in spite of turbulent economic and political environment
PANAMA · Report · 29 Jan 2016

We summarize in this document the impact of some key events in order to assess the economic panorama for Panama this year. Some of them are of internal nature: The new banking regulations (adding to the likely increase in the cost of funds to local banks) that may increase the lending rate...

The Challenges Ahead for 2016
PANAMA · Report · 30 Dec 2015

Amidst regional distress, our expectation is that Panama’s GDP will grow 5.6%-5.7% this year. We expect private consumption to continue to offset the fallout from lower private and public investment, as well as the impact of a stronger US Dollar on net exports. The MEF is projecting growth at a s...

Slower growth amidst regional uncertainties
PANAMA · Forecast · 17 Dec 2015

The Panamanian economy continues on its path towards more moderate growth: real GDP expanded by 5.6% in Q3 and 5.8% until September 2015 y/y. Transportation, storage and communications, realty and services to business, construction, financial intermediation, and electricity, gas and water were th...

Fiscal Results, Pension System and Politics
PANAMA · Report · 01 Dec 2015

The fiscal results to September 2015 released by the Ministry of Economy and Finance showed an overall deficit of the NFPS of $903 million (-2.3% of GDP[1]), smaller than last year’s (-5.8% of estimated GDP1). Although this figure represents sound public finance management, the main reason the de...

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