The year did not start with good news for Panamanians, despite the increase in the minimum wage, which should begin to be calculated at the end of January.
Even in 2023, the purchasing power of the population continued to fall, which, along with the abolition of some subsidies and the increase of electricity for a significant number of homes and industrial and commercial enterprises, leaves a gloomy outlook.
We should not ignore the tension that exists in the Middle East, as a result of the war between Israel and Palestine, which will certainly lead to an increase in the prices of oil and its derivatives.
According to the consulted experts, the price of life is set to rise this year.
And the possibilities to improve the purchasing power of Panamanians are nil.
Former Economy Minister Frank De Lima considered two unlikely scenarios.
The first would be to raise wages, but with unemployment so high and the economy in shambles, “that’s not feasible”.’
3.4%
was an increase in food in 2023, according to data from the Bureau of Statistics and Population Census.
300
thousands of pensioners and retirees would be the main victims of this situation.
On January 11, the government announced an increase in minimum wages between 4.5 and 6 percent.
The price increase should be in effect from the second half of January, but apparently it will not be enough for what follows.
Another alternative, De Lima added, would be to approve state subsidies, “but we have very weak public finances.”
Namely, for this year, the Government canceled the Digital Voucher and the price freeze for gasoline and diesel of 91 octane.
Economist Juan Jované argued that with wages not rising and prices rising, it was obvious that consumption would be affected.
He added that it affects pensioners and pensioners more, because they have a fixed pension and all this inflation reduces their purchasing power.
Jované advocates the idea of establishing a minimum wage with some mechanism that would prevent price increases, because if businessmen transfer that increase to prices, it is of no use.
How harmful is it to the economy?
Those companies that produce consumer goods or sell them have less demand and this causes less production of gross domestic product (GDP), explained Juan Jované.
“To the extent that people have less, they can go into debt for a while, but in Panama that way is closed, because they are already paying off their credit cards to use them next month, and that doesn’t increase consumption, it limits it. that,” thought Jované.
For his part, economist Salomón Samudio expressed that since the Panamanian economy depends on the tertiary or service sector, which produces growth but does not create high-paying jobs, the informal economy grows and thus reduces the spending power of Panamanians.
Another factor is also taken into account on a scale that would make life more expensive for Panamanians, such as the increase in electricity, which affects the increase of other products in the basic family basket, which reduces purchasing power and expresses their dissatisfaction. when they go to the supermarket they can buy smaller or lower quality products.
In this regard, the Minister of Trade and Industry, Jorge Rivera Staff, stated that traders who will be affected by the increase in electricity have alternatives that are being developed as part of public policies.
Source: Panama America
I am Jason Root, author with 24 Instant News. I specialize in the Economy section, and have been writing for this sector for the past three years. My work focuses on the latest economic developments around the world and how these developments impact businesses and people’s lives. I also write about current trends in economics, business strategies and investments.
