Panama will grow 1.5% less than forecast

After the crisis that took place last October and November, the projections of Panama’s economic growth at the end of 2023 are not very favorable.

Economists and workforce inclusion experts predict that the Central American nation’s economic growth will be at least 1.5% lower than forecast for the year to come.

Panama’s economic growth for 2023 is set at 6.5 percent, but everything indicates that it will not reach that figure.

In this regard, the former president of the College of Economists, Olmedo Estrada, suggests that the negative effects of strikes and closures in October and November “They’re making us do some calculations because it’s estimated that the economy has been paralyzed by about $2 billion and we have to analyze to see how much that affects growth.”

He emphasizes that “it is likely that we will not reach 6.5 percent again, but it is not that we will fall so sharply, because the year is already coming to an end, the impact of the closure of the mine will not affect us this year, because the year is actually ending and growth is maintained in a sustainable way . The impact will be seen next year when the contribution that the mine had to make to the state coffers is no longer visible.”

The economist suggests that it is likely that Panama closes at 5% to 5.5%, which he thinks is not bad, but that there is definitely a warning sign for next year where a very strong decline in GDP is expected, if some measures are taken important measures taken to recover some of what will be lost from the mining company.

Meanwhile, René Quevedo, an employment expert, indicates that most analysts agree that the protests from October to November mainly affected the performance of agriculture, trade, tourism and logistics, which would cause a loss of approximately 1.5% of GDP for 2023 .’

2000

The loss recorded by the crisis in October and November is estimated at millions of dollars.

6.5%

Panama’s economy was projected to grow in 2023.

Consider that this situation would leave net growth around 4%. However, a recent work report published by the National Institute of Statistics and Census (INEC) until August 2023, just before the October-November protests, reveal trends that should be paid attention to.

Remember that between October 2021 and April 2022, 16,996 new jobs were generated per month, a figure that falls to 5,766 per month from May 2022 to August 2023. A decrease of 66%, with larger decreases in key sectors of the economy such as : Industry (-84%), construction (-92%), trade (-113%, from the creation of 3,807 new jobs, to the loss of 482 jobs per month), logistics (-104%, from the creation of 2,153 jobs per month, to loss) 92 jobs per month).

Other service activities (-113%, from +2,176 jobs/month to -411/month) The exceptions are agriculture and the hotel and restaurant sector. The economy went from losing 378 agricultural jobs per month (October 2021 – April 2022) to generating 884 new jobs per month (May 2022 – August 2023), while hotels and restaurants generated 429 new jobs in the same period. . per month to 742 per month (an increase of 73%).

However, due to the protests and the high level of presence in all these sectors, the impact of mobility restrictions on the labor force was severe, reversing the improvements in employment in agriculture and tourism, as well as exacerbating the decline in employment in other economic activities.

In this scenario, a complicated year 2024 is predicted, with higher levels of unemployment and informal labor, as well as a projection of GDP growth for that year, which would be around 1 or 1.5%.

In the midst of this reality, economist Olmedo Estrada points out that the austerity policy is necessary, because in fact a very high budget (32 billion) is planned, and in fact the revenues were already visible before the verdict was passed. it was over it is impossible to cover it and it will create a very large deficit, and deficit means debt and indebtedness means further limiting the dynamics of state finance management

What is expected, according to Estrada, is to actually take into account the budget from which revenues could be settled to cover expenditures and that a deficit would not be created that would later cost the debt and limit the execution of the Government.