Panama’s economy to contract

• The Panamanian economy will likely contract in the coming quarters due to increasing government restrictions to combat the spread of the Covid-19 outbreak and slumping global trade flows through the Panama Canal.
• Panama’s fiscal deficit will widen in the coming quarters as stimulus measures designed to mitigate the economic impact of the Covid-19 pandemic and subdued revenues weigh on the fiscal balance.
• The ongoing push for constitutional reform in Panama will underpin political uncertainty in the country, as the process may split President Laurentino ‘Nito’ Cortizo from his Partido Revolucionario Democrático (PRD) or spark public protests.
• Panama will continue to run wide current account deficits as its negative goods trade balance exceeds its services trade surplus.

 (Source: Fitch)