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COUNTRY INSIGHTS

The Legislative Assembly (Diputados) approved the new Fiscal Responsibility Law (FRL) and President Varela signed it today
PANAMA · In Brief · 10 Oct 2018

After a long tug-of-war between the Ministry of Economy and Finance (MEF) and the Diputados, the new FRL was approved yesterday. The new fiscal architecture follows the pattern presented by the MEF in mid-year and discussed in our previous issue:1. The adjustment to the deficit (related to Panama...

De-acceleration continues in 2018, and China-Panamá relations are under scrutiny
PANAMA · Report · 28 Sep 2018

Real GDP grew 3.1% y/y in Q2 2018, continuing its downward trend. Accumulated growth during the first half of the year was 3.7%. During the second quarter, the month-long labor strike in the construction sector (around 15 percent of GDP) brought activity to a halt; therefore, the positive surpris...

With ample support Laurentino Cortizo won the primaries of the PRD Party
PANAMA · In Brief · 17 Sep 2018

Laurentino Cortizo (Nito) was elected presidential candidate of the PRD for the May 2019 elections in Sunday’s primaries. Several key issues are relevant for the future: (1) The participation of the party members was higher than expectations (60.5% of the affiliated members, or more than three hu...

Why is the economy in a significant slowdown?... and what to we expect in the short term
PANAMA · Forecast · 03 Sep 2018

Our growth projections for 2018 (3.8%) are lower than what international analysts have argue. ECLAC projects 5.2% growth for the year despite a month-long labor strike in the construction sector from mid-April to mid-May (construction represents almost twenty percent of GDP). IMF is not so optimi...

Gloomy outlook for the public sector finances
PANAMA · In Brief · 20 Aug 2018

The official Ministry of Finance’s (MEF) report on Non-Financial Public Sector performance through June showed dismal numbers. Total revenues grew 0.8 percent in the first six months: Central Government revenues didn’t increase even in nominal terms and only Social Security revenues performed rea...

They are off
PANAMA · In Brief · 13 Aug 2018

Cambio Democratico (CD) held its primary elections to select the presidential candidate this past Sunday. The battle was between Rómulo Roux (a lawyer, center-right politician and former Minister of Canal Affairs in the Martinelli administration) and José Raúl Mulino (former Minister of Security ...

Economy slows down but mining presents a new opportunity for 2019
PANAMA · Report · 27 Jul 2018

The economy´s slowdown in May was the deepest in decades, fueled by a month-long labor strike in the construction sector. The Monthly Index of Economic Activity (IMAE) expanded at a rate of 0.76% y/y in May and 3.17% ytd, confirming our forecast of slower economic growth of around one percent due...

GDP slows in Q1 even before the big construction strike
PANAMA · Report · 29 Jun 2018

Real GDP expanded 4.2% in Q1, the lowest quarterly growth in the past three years. Activity was driven by fisheries, 30.2%; general government (12.6%), transportation and communications (5.2%), construction (4.9%), social services and private health (4.8%), financial intermediation (4.1%) and com...

The political impact of Ricardo Martinelli's extradition
PANAMA · In Brief · 22 Jun 2018

Let’s define “uncertainty” in the current context. Panama will formally initiate the political campaign next August when Cambio Democratico (CD), the party created by former President Martinelli (2009-2013) -today on the opposition side- will hold its primary election to nominate the Presidential...

The political and economic consequences of Martinelli’s extradition
PANAMA · In Brief · 11 Jun 2018

On June 8, the Department of State accepted the request of the Panamanian Government to extradite former president Ricardo Martinelli (RM) to Panama, after being held for a year in a Federal detention center in Miami. He will be returning to Panama today. In principle, this outcome is a victory f...

A worse than expected year with elections looming
PANAMA · Report · 31 May 2018

The Monthly Index of Economic Activity (IMAE) expanded at a rate of 2.9% y/y in March and 3.5% YTD confirming our predictions of a slower 2018 compared to 2017, when the economy grew at 5.4%. The main drivers during the first quarter of the year were commerce, transportation and communications (C...

Strike by construction labor union is hurting economic growth
PANAMA · In Brief · 16 May 2018

Workers of the powerful construction union (SUNTRACS) and the private sector Panamanian Chamber of Construction (CAPAC) are negotiating a four-year wage raise. After 28 days of strike, SUNTRACS recently announced that they will not accept the arbitrage procedure requested by CAPAC (and urged by P...

Three themes that make us reconsider our economic expectations for 2018
PANAMA · Report · 01 May 2018

The Monthly Index of Economic Activity (IMAE) expanded at a low rate of 3.1% y/y in February and 3.9% YTD confirming the predictions of business people of a worse year than 2017, when the economy grew at 5.4%. Still, international analysts and rating agencies predict a better year in 2018. The ma...

Commercial and diplomatic relations between Venezuela and Panama in a lowest point in recent history
PANAMA · In Brief · 06 Apr 2018

Venezuela suspended several commercial and financial activities with Panama’s Government and a group of Panamanian companies as a measure to protect “their economic system”. The list includes President Juan Carlos Varela and all his Ministers, and Panama’s flag carrier Copa Airlines. On April 5th...

Political turmoil amid healthy economic growth
PANAMA · Report · 28 Mar 2018

Panama continued the path of solid economic growth during 2017 at 5.4%, which coincided with our projection published in February and later ratified in October. This GDP growth was primarily explained by the dynamics of the external-oriented activities (Panama Canal, ports, air transportation) an...

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