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Panama: Economy grows at the quickest pace

Updated: Jan 2, 2022

Economy grows at quickest pace on record in Q2

According to a preliminary estimate, economic activity rebounded in the second quarter, increasing 40.4% year-on-year and contrasting the 8.5% contraction recorded in the first quarter. That said, the reading was heavily flattered by a low base effect, and activity was still below 2019’s pre-pandemic levels.

Economy grows at the quickest pace - Panama

The industrial sector spearheaded the upturn, growing 162.3% in Q2 (Q1: +11.8% YoY), as ambitious public infrastructure spending boosted the construction subsector and the new copper mine drove up mining and quarrying production. In addition, the services sector grew 19.4% annually in the second quarter, contrasting the first quarter's 9.7% contraction, amid strong wholesale and retail sales and robust transportation activity. Meanwhile, the agricultural sector rebounded in Q2, growing 7.3% and contrasting the 0.9% decrease recorded in the previous quarter. Moving onto Q3, the economy should have continued to recover at a healthy, albeit slower, pace. The key construction subsector likely continued to benefit from infrastructure projects but will have been impacted by the fading base effect. Meanwhile, mining activity likely followed a similar pattern, as copper output at the Cobre Panama mine began to increase during the third quarter of last year.

FocusEconomics Consensus Forecast panelists project that the economy will expand 11.0% in 2021, which is up 0.3 percentage points from last month’s forecast, and grow 6.4% in 2022.

The Panama government announced on Monday, May 11, the plans to begin a six-phased reopening of its economy starting from Wednesday, May 13, amid the ongoing coronavirus disease (COVID-19) pandemic. According to reports, e-commerce, mechanical workshops, spare parts, technical services, industrial fishing, and aquaculture will be allowed to reopen in the first phase. The dates of the reopening of additional sectors in the next phases are yet to be determined, though reports suggest that the second phase will include the reopening of the construction sector, non-metallic mining and industry, and religious services and sports activities under social distancing conditions.

Panama Economic Outlook - 2020 & Covid19

Panama's economy is small, very much open, highly diversified, dollar-driven, and highly competitive by regional standards. The country experienced strong growth of 3% in 2019, driven by the financial sector, infrastructure spending, and revenue from the Panama Canal.

According to the updated forecasts from 14th April 2020, due to the outbreak of the COVID-19, GDP growth is expected to fall to -2.1% in 2020 and pick up to 4% in 2021, subject to the post-pandemic global economic recovery. Source:

Panama City

Panama Economic Outlook - 2020

Economic growth accelerated in the final quarter of 2019, after slumping to a near one-decade low in the third quarter. A strengthening services sector spearheaded the upturn, thanks to sturdier wholesale and retail trade growth.

This more than outweighed a slowing industrial sector, which came despite rocketing output from the Cobre Panama mine, while a downturn in the primary sector also restrained the overall acceleration. Turning to Q1 2020, strong momentum appears to have carried over from Q4 2019, although the negative impact of coronavirus on global trade is likely affecting activity in the Panama Canal.

Meanwhile, in its recent Article IV concluding statement, the IMF highlighted the country’s improving external position and stable fiscal dynamics; however, the Fund conveyed concern regarding reputation damage following Panama’s recent reentry to the EU’s “call for action” blacklist due to its tax-haven status.


2016 - GDP Up 5.2% in June 2016 // PIB crece 5,2% ( 2016)

In the first quarter, the economy grew by 5.2% compared to the same period in 2015, driven internally by the activities of financial intermediation and construction.

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