In January of this year, the Monthly Index of Economic Activity reported a 15% year-on-year drop, which is similar to the behavior recorded from March to December 2020, a period in which the pandemic severely affected productive activities.
This index contracted considerably, due to the effects of the Covid-19 health emergency. Among the economic sectors that were affected were: Hotels and restaurants, other community, social and personal service activities, construction, commerce, financial intermediation, manufacturing industries, electricity and water, real estate, business and rental activities, and transportation, storage and communications, among others, according to the Comptroller General's Office of the Republic.
Twelve months after Central America began a health and economic crisis triggered by the covid-19 outbreak, Guatemala was the fastest recovering economy and Panamanian economic activity is the slowest to return to pre-pandemic levels.
In March 2020, the first cases of covid-19 began to be detected in the countries of the region. The highly contagious disease, which at that time had already claimed the lives of thousands of people around the world, forced Central American governments to establish mobility restrictions.
As of June, Central American economies began to show signs of incipient recovery and as of August, Guatemala, Nicaragua and Costa Rica registered the smallest drops in their levels of economic activity.
Since March of this year, the region has faced a severe economic crisis generated by the outbreak of covid-19.
The World Bank projects that the Central American economy will contract by 3.6% this year, due to restrictions on movement, a decline in remittances and tourism, and a drop in agricultural prices.
The sudden and widespread impact of the coronavirus pandemic and the measures taken to contain it have caused a drastic contraction in the global economy, which, according to World Bank forecasts, will shrink by 5.2% this year, the bank reported on June 8.
Last year, GDP amounted to Ch$66,801 million, and in real terms, production increased by 3% over that reported in 2018.
This 3.0% growth for 2019, in the amount of Ch$43,061.1 million (chained value to 2007), was mainly driven by the mining sector, reported the General Comptroller of the Republic.
The dynamism of the mining sector is specifically explained by the increase in the activity of the extraction of copper concentrate, whose production in tons increased from the third to the fourth quarter by 210%.
During the fourth quarter of 2019, Walmart's sales increased year-on-year in all countries in the region, except in Costa Rica, where they fell because of the lower dynamism of local economic activity.
The signs of recovery reported in the Costa Rican economy in the second half of 2019 do not seem to have been enough to boost retailtrade, as one of the largest supermarket chains is registering a drop in sales.
During November 2019, the Monthly Index of Economic Activity reported a 3.6% year-on-year change, which was largely determined by commercial activities and financial intermediation.
Among the categories of economic activity showing positive behavior were: commerce, transportation, storage and communications, public administration, financial intermediation, agriculture, electricity and water, mining and quarrying, and domestic services, reported the General Comptroller of the Republic.
In Panama the government estimates that in 2020 the economy will grow between 4% and 4.5%, a rise that would be determined by the behavior of construction, tourism and exports.
According to estimates from the Ministry of Economy and Finance (MEF), by the end of 2019 the increase in the Gross Domestic Product (GDP) could fluctuate between 3% and 3.5%, while by the present year 2020 it will be between 4% and 4.5%.
After the economies of the region grew by 2.6% in 2018 as a whole, the IMF estimates that 2019 would close with a rise of 2.7% and could reach 3.4% by 2020.
The document "World Economic Outlook", prepared by the International Monetary Fund (IMF), states that for Panama the projected growth of the Gross Domestic Product (GDP) for 2019 was reduced from 5% to 4.3%.
During the second quarter of the year the constant GDP totaled $10.498 million, 3% more than that reported in the same period of 2018, explained by the activity of transport and trade.
The General Comptroller of the Republic reported that activities related to the domestic economy performed positively this quarter: transportation and communications, commerce, construction, financial intermediation, government services, health and education.
During the first quarter of the year, constant GDP totaled $10.599 million, 3% more than reported in the same period of 2018.
Transport and communications, financial intermediation, electricity and water supply, construction and government services provided good performance during this period, according to the Comptroller General of the Republic.
Improving competitiveness and modernizing institutions are some of the challenges that Panama must overcome in order for high levels of economic growth to result in greater development for the country.
The document "Panama: Challenges to consolidate its development", developed by the Inter-American Development Bank (IDB), explains that the Panamanian economy has been one of the most dynamic in the world in recent years. Between 2006 and 2017 the country had an average annual growth of 7.2%, compared to 2.9% in Latin America and the Caribbean (LAC) and 1.8% in the countries of the Organization for Economic Cooperation and Development (OECD).
During 2018, the constant Gross Domestic Product totaled $41,693 million, almost 4% more than what was reported in 2017, a rise that is partly explained by the behavior of the commercial sector.
During 2018, the behavior of economic activities related to the external sector highlighted the Panama Canal, the Colon Free Zone and financial intermediation, reported the Office of the General Comptroller of the Republic.
"The tightening of global financing conditions is a concern for Central American countries with large current account deficits or those highly dependent on capital flows."
According to the report "World Economic Outlook - January 2019" compiled by the World Bank (WB), countries with a high external debt burden would be at risk if a sudden change in investor confidence in emerging market and developing economies were to occur.
According to the international organization, the Panamanian economy will grow 6.3% this year, boosted by the recovery of the construction sector and the start-up of operations of a large mining project.
In the words of the International Monetary Fund (IMF), the Central American country's economy is projected to remain among the most dynamic on the continent, as the outlook remains positive.
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