Panama GDP Growth Expected to Slow in 2024

  • Panama's economy is expected to see growth slow in 2024, according to the latest staff concluding statement done on the country by the International Monetary Fund (IMF).
  • Panama was hit hard by the pandemic, but the economic recovery has been strong. In 2023, GDP grew by 7.5%, exceeding expectations for the third year in a row. Drought has led to a reduction in the daily number of ships going through the Panama Canal, but the impact on revenues of the Panama Canal Authority (ACP) has been limited so far.
  • In late 2023, after Panama’s Supreme Court ruled that the new mining contract with copper mine operator Minera was unconstitutional, the government announced its intention to close the mine. The ruling followed months of widespread social protests, which had a significant impact on economic activity in the fourth quarter of last year. 
  • As a result of the closing of the mine, GDP growth is projected to decline to 2.5% in 2024 before gradually improving over the medium term. The slowdown is not expected to be broad-based but reflects the closing of Minera, which contributed, directly and indirectly, about 5% of Panama’s GDP.
  • The closing of the mine also entails the permanent loss of about 0.6% of GDP in fiscal revenues and 7.5% of exports of goods and services. Over the medium term, GDP is expected to grow by 4%, while the current account deficit is projected to range around 2% of GDP.
  • The near-term economic outlook is subject to a large degree of uncertainty, and the balance of risks is tilted to the downside. Downside risks include the loss of investment grade status (due to concerns over Panama’s fiscal situation), which would raise Panama’s external borrowing costs and increase refinancing risks. There is also the risk of renewed social unrest and further fallout from the closing of Minera.
  • Furthermore, a longer-than-expected drought could reduce the ACP’s revenues and its contributions to the government. Over the medium term, claims from the mine arbitration pose a significant risk to the public finances.

(Source: International Monetary Fund)