Large-scale infrastructure projects will be key to Panama returning to economic growth.

“The country still has a large infrastructure gap, which presents an opportunity for large transportation infrastructure projects,” says Moody’s in a new report.

GDP growth of 8-10% is expected for 2021, following a 17.9% contraction driven by the pandemic last year.

Moody’s says that for Panama to cement itself as the logistics and trade hub for the Americas, the country will need to continue building capacity. Last December, the Panama government stated it would start awarding PPP projects.

There are 56 infrastructure projects in Panama detailed in the BNamericas project profile database, including 51 projects with a total planned capex of S$37.9bn.

Some of the larger projects include the Cobre Panama mine (US$6.5bn), line 3 of the metro (US$2.51bn) and a water management system for the Panama Canal (US$2bn).

Finance for the works would have to come through foreign direct investment in the logistics, energy and transport field and how quickly the Panamanian government can get resources.

This would either be through PPPs or capital spending. This would also support the construction industry, whose activity fell an average of 80% during 2Q20 and 3Q20.

Construction in Panama has been subject to large boom/bust cycles with the last boom in the 2010-14 period, with expansions to the Panama Canal and new metro lines.

“Challenges include the government’s ability to attract foreign direct investment and to mobilize resources to continue building public infrastructure (e.g., transportation) in the context of much more limited fiscal space post-pandemic,” added the report.

Source: bnamericas

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