Panama as Seen by the IMF, June 2018

Due to the recent strike in the construction sector, the entity has reduced projections of economic growth for this year from 5.6% to 4.6%.

Friday, June 1, 2018

<span dir="ltr">However, recovery from the impact of the strike and the entry into operation of a large copper mine will lead to an upward revision of around one percentage point in the growth projection of 5.8% for 2019.

From a statement issued by the IMF:

June 1 2018. A staff team of the International Monetary Fund (IMF), led by Alejandro Santos, visited Panama during May 21-June 1, 2018. At the conclusion of the visit, Mr. Santos issued the following statement:

“The economy of Panama remains among the most dynamic and stable in Latin America despite the recent prolonged strike in the construction sector and the relative weakening of economic activity in the first quarter which will lead to a downward revision of our growth projection of 5.6 percent for 2018 (by about 1 percentage point). At the same time, the recovery from the impact of the strike and the coming on stream of a large copper mine will lead to an upward revision of our growth projection of 5.8 percent in 2019 (by about 1 percentage point). Over the medium-term, the economy will gradually converge to its potential growth of 5.5 percent. Inflation will remain low and is expected to pick up to about 2 percent in 2018 mainly due to higher fuel prices.

“The external position is expected to improve significantly next year with the completion of the import-intensive mining project, the start of copper exports, and external service receipts related to higher traffic in the Panama Canal. The outlook is subject to downside risks mostly related to external factors, including lower international maritime traffic due to trade disputes, and a faster-than-expected tightening of U.S. monetary policy, while a stronger global growth would be an upside risk and a boost to activity.

“Fiscal policy is projected to remain guided by the deficit limit under the fiscal responsibility law (which we estimate to be about 1.5 percent of GDP given the expected contributions from the Panama Canal Authority of some 2.5 percent of GDP). Efforts will be required to curb the growth of current expenditures to provide additional room for needed strategic public investment. The authorities’ initiative to establish a fiscal council will further strengthen the fiscal framework.

“The banking system remains solid, well capitalized, liquid and profitable, with low non-performing loans, and the authorities continue to advance their agenda for improving bank regulations and supervision (including the implementation of Basel III). Given the need to continue strengthening the financial system, it will be important to take further measures related to financial integrity and tax transparency. In particular, the mission supports to have legislation approved related to the criminalization of tax evasion, which would bring Panama closer to international standards on Anti-Money Laundering/Countering the Financing of Terrorism, and tax transparency, thus helping to strengthen Panama’s position as a regional financial center.”

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More on this topic

Panama: IMF Reduces Growth Projections

February 2019

Because the economy is on the road to rebound after a temporary slowdown, the entity forecasts that in 2019 will register a 6% increase and not 6.3%, as initially planned.

Panama's economic fundamentals remain strong. The economy is on the road to rebounding from the temporary slowdown and will be gradually converging to its potential growth of 5.5% in the medium term, explains the IMF after its last visit to the country.

Good Outlook for Honduran Economy

November 2018

Following the IMF assessment, the country's macroeconomic conditions are expected to remain strong and growth is expected to be solid in coming years.

From the International Monetary Fund statement:

November 16th, 2018. An International Monetary Fund (IMF) team led by Esteban Vesperoni visited Tegucigalpa from November 12-16 to assess recent economic developments since the completion of the 2018 Article IV consultation in May and the medium-term outlook. At the end of the visit, Mr. Vesperoni issued the following statement:

Panama as Seen by the IMF in August 2015

August 2015

Economic growth of 6% to 7% is foreseen in the medium term, driven by the economic recovery in the United States and the expansion of the canal.

From a press release issued by the IMF:

On June 10, 2015, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Panama.

Panama As Seen by the IMF in July 2015

July 2015

The IMF expects economic growth will continue and recommends that the authorities take advantage of the benign inflation level to suspend price controls.

From a press release issued by the IMF:

On June 10, 2015, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Panama.

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