“Despite temporarily slowing in 2018, the Panamanian economy is poised for a rebound in the near term and will remain among the most dynamic in Latin America.”

What the International Monetary Fund (IMF) said about the slowdown suffered by Panama’s economy is not a surprise, considering what the indicators have been showing over the past few months. One of the best examples is the construction sector, which between January and August reported a reduction of 40% compared to the same period in 2017. Sales of new vehicles, a good thermometer of consumption of Panamanians, have not managed to rebound from last year, while foreign direct investment, which in previous years did not stop growing, reported a decline of 13% in the first six months.

See “Economic Activity Slows Down”, “Construction Continues in Alarming Numbers“ and “ Vehicles in Panama: Sales Fail to Rebound“.

Despite these figures, the IMF’s assessment is that the slowdown is temporary, and a rebound should begin to be noted next year.

From FMI report:

Despite temporarily slowing in 2018, the economy is poised for a rebound in the near term and will remain among the most dynamic in Latin America. The outlook is positive, albeit set against heightened downside risks. Policies should aim at maintaining the conditions for sustained growth by preserving Panama’s competitive advantage as an attractive destination for business. Strengthening AML/CFT oversight and enhancing tax transparency and information exchange will be important to cement Panama’s position as a regional financial center. It will also be important to preserve fiscal discipline as this is the main macroeconomic stabilization instrument and to reinforce the fiscal framework with the establishment of a fiscal council. Given the importance of the financial system in the Panamanian economy, the authorities should continue to bolster systemic risk assessment, risk-based supervision and put in place robust frameworks for macroprudential policy and crisis management.

See FMI full report.