2023-10-19 20:41:00
It’s news. Panama leads GDP growth in the region with 6% in 2023. It stands out in sectors such as commerce, construction, tourism, banking, insurance, transportation and electricity. However, a slowdown is expected in 2024 with a rate of 4%.
To avoid negative surprises, the IMF recommends more efficient government management. This includes reducing the fiscal deficit and strengthening banks.
The World Bank anticipates between 6.3 and 6.5% in the next two years. It foresees a drop in public debt of 55.3% in 2025. The reduction in the fiscal deficit can reach 1.5% of GDP. Fitch, the risk rating agency, has lowered the outlook from stable to negative. This is due to “persistent fiscal pressures and uncertain prospects for consolidation.” The Government’s use of “one-off measures and accounting maneuvers” to reduce fiscal deficits is also a reason.
What to highlight. “Panama is a country of service and that is what frames and provides its economy. We are not producers, oil companies or large maquilas. We have a privileged position and that has allowed us to have one of the greatest resources like the Canal,” says Gilberto Córdoba. Murillo, Ambassador of Panama.
He considers the risk rating agency’s change of perspective dangerous. “It would place us as an unsuitable country, not suitable for foreign investors.” “Panama is not limited to simply being a Canal. It represents a fiscal guarantee for laws that favor investors,” says Córdoba. Along with its tourist attractions, the country has cutting-edge infrastructure. This includes seven fiber optic highways that drive the technology. It has two convention centers and a favorable legal system for investors. The parity of the balboa with the dollar makes it an attractive place for business. It also stands out as an air hub with connections to more than 69 countries. On the other hand, there are two Free Zones plus 23 Free Zones established in the territory.
On the radar. Regarding mining operations, the diplomat explained that his Government reached agreements to increase the percentage contributed by this industry to the country.
Minera Panamá, SA, a subsidiary of the Canadian First Quantum Minerales, initially contributed 2% royalties. Two years ago, new conversations began. The current Government proposed: 49% for the company, 49% for the State and the remaining 2% for the workers. However, after negotiations, 15% was agreed upon. The extractor began exporting copper in 2019 from the province of Colón on the Caribbean coast. As of 2011, construction of the infrastructure for the open pit mining project began. It is located in a protected forest that covers about 12 thousand hectares and is part of the Mesoamerican Biological Corridor. Regarding ports, the Ambassador points out that 6% of global maritime transport passes through the Canal. Its main partners are China and the United States. “We are planning to create a new lake and are working to supply fresh water from other aquifers.”
Regional echoes. IMF projections indicate that in 2023 Central America and the Dominican Republic will experience an average economic growth of 3.8%. But a slowdown is estimated due to external factors and adverse weather conditions. However, a moderate rebound is anticipated in 2024.
According to the international entity, moderate growth has been maintained. The positive factor is due to people’s spending. A fact driven by remittances that continue to arrive in significant quantities, especially in Nicaragua, Guatemala and Honduras. In addition, the services sector has also been in the process of recovery.
Costa Rica forecasts growth of 4.4% and 3.2% in 2024. El Salvador could register an increase of 2.2% followed by 1.4%. As for Guatemala, growth of 3.4% is projected in 2023 with a subsequent expansion of 3.5%, according to IMF estimates.
Honduras estimates a growth of 2.9%, increasing to 3.2% in the following period. Nicaragua expects to grow 3% and 3.3% next year. Regarding the Dominican Republic, it foresees 3% in the current year and a more solid expansion of 5.2% in 2024.
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