The calm before the storm: the good news from 2023 and what lies ahead for the economy and fiscal situation in 2024

PANAMA - Report 26 Mar 2024 by Marco Fernandez

In 2023, real GDP growth reached 7.3%, despite the November social crisis. Growth was driven by traditional sectors such as construction, commerce, transportation, and real estate. Monthly indicators suggested a slowdown in Q3, with a contraction in Q4. Construction activity, supported by public and private projects, experienced growth at a rate lower than that estimated by the GDP. Similarly, public spending on infrastructure surged in Q3 but contracted in Q4. Commerce exhibited growth throughout the year, but consumer-oriented companies faced challenges. Despite increased consumer credit, car sales saw a decrease in the last quarter. Re-exports from the Colon Free Trade Zone fluctuated throughout the year. Real estate and business services grew steadily, despite indicators suggesting a decrease in real estate sales. Tourism registered growth but slowed in the last quarter. In 2024, we expect real GDP growth of 1.3%, with challenges from the cessation of activity of the copper mine Cobre Panamá, higher interest rates, and electoral uncertainty. Inflation is estimated to increase but will remain below previous estimates. The fiscal deficit and public debt are expected to rise due to the economic slowdown and reduced revenues. Political uncertainty surrounds the upcoming elections, with a significant lead for José Raúl Mulino in the polls, despite legal challenges to his candidacy.

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