Panama: Strong Growth Belies A Sluggish Recovery From COVID-19

• Fitch Solutions revised its Panamanian real GDP growth forecast to 11.2% in 2021, from 12.2% previously, to reflect ongoing public health restrictions that will hamper domestic demand. It forecasts 5.8% growth in 2022, meaning that real GDP will not recover from the COVID-19 pandemic until 2023.
• While a steady rebound of industrial activity and strong export growth will make Panama a regional growth outperformer, this largely reflects base effects from a 17.9% contraction in 2020.
• Fitch highlights downside risks to its short- and long-term growth forecasts due to the potential for future global economic disruptions from the Delta variant and any fiscal adjustments carried out by the Panamanian government in the coming years that may weaken public investment.

(Source: Fitch Solutions)