MEF: Panama’s GDP started to recover in 2020

Economic activity measured by Gross Domestic Product (GDP) began to recover from the third quarter in 2020after hitting a low in the second quarter of that year, The reported Ministry of Economy and Finance (MEF).

For the year 2021, the real GDP of Panama recorded a growth of 15.8%, which is the highest in Latin America. During 2022, the normalization of activities was completed and economic growth during that year reached a figure of 10.8%, thanks to the resilience and diversification of the national economy, he reported National Institute of Statistics and Census (INEC).

It’s recent World Bank (WB) believes that Panama will lead regional economic growth by improving economic growth projections from 4.5% to 5.7% for this year 2023, according to an updated report on economic analyzes and forecasts presented by the World Bank’s Chief Economist for Latin America and the Caribbean, William Maloney.

Maloney said that “Panama is expected to grow at 5.7% this year, 5.8% and 5.9% for the next two years, which is a good performance for the country compared to those in the region.”

The new report of the World Bank entitled “Potential of integration. Opportunities in a Changing Global Economy”, reflects that “countries must preserve their hard-won resilience and take advantage of the unique opportunities offered by global economic trends towards nearshoring and green industry”.

In that order, the president in Inter-American Development Bank (IDB), Ilan Goldfajnconfirmed that “Panama was an example of how we can overcome difficult situations, the economic performance of this country over time was impressive, we are talking about an average growth of 6%, it is one of the fastest in Latin America. It was the fastest”.

He emphasized that Panama has adopted an intelligent and non-partisan approach in managing the canal, its infrastructure, its expansion to accommodate larger ships, focused on efficiency instead of politics.

The central government achieved budget execution, both for operations and investments, of 94% for fiscal year 2022, which continues to reflect high levels of performance in budget execution.

The country has maintained its investment grade, according to major risk rating agencies, Standard & Poor’s and Moody’s. In the case of Fitch Ratings, it reaffirmed Panama’s sovereign rating at BBB-, changing the outlook from negative to stable.

Minister of UPCG, Hector Alexander, has stated on various occasions that the two years of the covid-19 pandemic were “terrible” for the country’s economy and “irreparable losses”. At the same time, he reminded that, since Panama does not have a central bank, the automatic stabilizer policy was used, which has a lot to do with the issue of countercyclical policy.

He specified that this led to a “very strong” decline in current income, of around 25 percent in 2020, which had to be offset by an increase in debt, which “helped” to maintain levels of economic activity that otherwise could not have been achieved.

“We passed with a slightly more than 10% fiscal deficit Non-financial public sector (SPNF) in 2020, to a deficit of 3.93% in 2022, which contributed to the decreasing rate of growth of the public debt. For the year 2023, the Law on Fiscal Social Responsibility establishes a deficit of 3% as an upper limit, and we think that we will also adhere to it”, Minister Alexander confirmed.

He also emphasized that the weight of the public debt considering Nominal gross domestic product It was also significantly reduced and by 2022 it was less than 60%.

At the end of 2023, the economic results together with the adequate management of public finances, allow us to see that the country is moving towards the path of sustainable economic growth and job creation, strengthening macroeconomic stability and promoting investor confidence. .