Panama Outlook On External Position

• Panama's current account is expected to return to a deficit in 2021 and the years thereafter, although the shock of COVID-19 severely depressed Panamanian trade and narrowed the goods trade deficit. 
• High domestic consumption and a large construction industry make Panama a major importer of consumer goods, capital goods and fuels, which has historically resulted in persistent current account deficits. However, a collapse in imports in 2020 pushed the current account balance to an estimated surplus of 0.1% of GDP. 
• As the economy recovers in 2021 and the years thereafter, the agency expects the current account deficit will stabilize around 3.5% of GDP in the second half of the forecast period. Capital inflows will be enough to sustain the shortfall, as the country's ease of doing business and dollarization continue to make it attractive to international investors.

(Source: Fitch Solutions)