JP Morgan raises GDP growth forecast for Panama

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By LatAm Reports Staff Writers

According to the report, positive news is beginning to emerge that suggests that the timing of a possible downgrade (credit) could be longer.

The Government of Panama reported that JP Morgan raised its forecast for this year for economic growth from 3 per cent to 3.5 per cent and reduced the risk of credit degradation in the country, whose debt was degraded last March by the Fitch qualifier.

JP Morgan’s analysis “improved the gross domestic product (GDP) growth forecast for this year, raising it from 0.5 percent to 3.5 percent year-on-year,” says a statement from the Panamanian Presidency.

The official source cites JP Morgan’s report also mentions that “positive news is beginning to emerge and now we think that the timing of a possible downgrade (credit) could be longer and the chances of smaller happening.”

On March 28, Fitch degraded from BB from BBB – the rating of Panama’s sovereign debt, a measure that they have not taken, at least for the time being, either S&P or Moody’s, which maintain the rating in BBB with a negative perspective and in Baa3 with a stable perspective, respectively.

One of the good news supported by JP Morgan is the relief of the transit restrictions of ships in the Panama Canal in the face of the arrival of the rains, following the heavy drought that forced the reduction of the number of daily crossings to 22, now above 30, which was a major blow to national finances.

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Another was that domestic consumption “remained much better” the period of uncertainty prior to the general elections of 5 May, won by former minister José Raúl Mulino, who is defined as a pro-private politician.

Panama’s GDP grew by 1.7 per cent in the first quarter of 2024, according to official statistics, patenting the brake on the Panamanian economy, which in the same period last year expanded by 9.3 per cent.

Local and international analysts and risk qualifiers have pointed to the sharp economic slowdown facing Panama this year and link it to the close of the end of 2023 a large copper mine, the drought that forced the interoceanic channel to restrict the passage of ships, and uncertainty over the general elections.

Panama’s dollar economy grew by 10.8 per cent in 2022 and 15.3 per cent in 2021, leaving behind the pandemic debacle, which collapsed GDP by 17.9 per cent in 2020.

Between 1993 and 2018 it was the fastest growing economy in Latin America, with an average of 5.9 per cent per year, according to data from the International Monetary Fund (IMF).

This article has been translated after first appearing in Panama America