Panama is back in the gray list of GAFI: an expected result with unpredictable consequences

PANAMA - Report 27 Jun 2019 by Marco Fernandez and Alex Diamond

During the FATF (Financial Action Task Force, GAFI in Spanish) plenary meeting last week in Orlando, Florida , the Republic of Panama was added again to the gray list of non-cooperating countries in matters related to money laundering and financial transparency, despite the efforts made by the Administration in recent years to comply with basic requirements set by the organization. Panama´s country risk went up after the news, as happened when Panama was included for the first time in the list in 2014-2016.

The official growth rate for the first quarter of 2019 was 3.1 percent, in line with our estimations. This is the slowest rate in the past twelve years. We stick to our optimistic projection of 4.4% for 2019 (although lower than the market), based on the estimated one billion dollars of copper exports, the continuation of public sector investments in infrastructure by the new Administration of President Cortizo and the improvement in the growth of private construction during the second quarter as the result of a full (albeit slow) activity in 2019 compared with the strike-laden 2018, but are expectant about the next Government proposal for fiscal adjustments.

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