Panama Lowers Ecomonic Growth Projection

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By LatAm Reports Editor

Economists argue that Panama is likely to be closing at 5% to 5.5%, which they considers not to be bad.

Following the crisis in October and November, the projections of Panama’s economic growth at the end of 2023 are unfavorable.

Economists and labor insertion specialists predict that the economic growth of the Central American nation will be at least 1.5% less than projected for the year that is almost over.

Panama’s economic growth by 2023 was set at 6.5%, however everything indicates that it will not reach the figure.

In this regard, the former president of the College of Economists Olmedo Estrada, proposes that the negative effects of the strikes and closures of October and November “put us to make some calculations because it is estimated that there was a paralysis of the economy for about 2 billion dollars and we have to analyze to see how much it impacts growth.”

He stresses that “we are probably not reaching 6.5% anymore, but it is not that we are going to fall so abruptly, because the year is closing, the impact of the closure of the mine will not impact us this year because indeed the year is closing and growth is being maintained in a sustained way. The impact will be seen next year when the contribution the mine had to make for the tax office is not visible.”

The economist argues that Panama is likely to be closing at 5% to 5.5%, which he considers not to be bad, but that there is definitely an alarm signal for next year where a very strong fall in GDP is expected, but some important measures are taken to recover some of what will be perceived from the mining company.

Meanwhile, René Quevedo, an expert and job insertion, indicates that most analysts agree that the October-November protests mainly impacted the performance of agriculture, trade, tourism and logistics, which would cause a loss of approximately 1.5% of GDP by 2023.’

2,000

Millions of dollars is estimated to have recorded loss with the crisis of October and November.

6.5%

It was what was projected to grow Panama’s economy in 2023.

He believes that this situation would leave net growth at around 4%.However, the recent Labour Report published by the National Institute of Statistics and Census (INEC) to August 2023, just before the October-November protests, reveal trends to be paid to.

Remember that between October 2021 and April 2022, 16,996 new jobs were generated per month, a figure that falls to 5.766/months from May 2022 to August 2023. A decrease of 66%, with higher contractions in key sectors of the economy, such as: Industry (-84%), construction (-92%), trade (-113%, of generating 3,807 new jobs, losing 482 jobs per month), logistics (-104%, of creating 2,153 jobs/month, losing 92 jobs per month).

Other service activities (-113%, from 2.176 jobs/month to -411/months) The exceptions were agriculture and the hotel and restaurant sector. The economy went from losing 378 agricultural jobs per month (October 2021-April 2022), to generating 884 new jobs per month (May 2022-August 2023), when hotels & restaurants went through, in the same period, 429 new jobs per month to 742 per month (73% increase).

However, due to protests and the high level of presence in all these sectors, the labour impact of mobility restrictions was severe, erasing improvements in agricultural and tourism employment, as well as aggravating the contraction of employment in other economic activities.

In this scenario, a complicated 2024 is glimpsed, with higher levels of unemployment and informality at work, as well as a projection of GDP growth for the year, which would be between 1 and 1.5%.

In the midst of this reality, economist Olmedo Estrada points out that an austerity policy is necessary, because a very high budget is actually being planned (32 billion), when the income really took place, before the ruling took place, it was already seen that this was almost impossible to cover it and it is going to make a very large deficit and deficit means indebtedness and indebtedness means to further limit the dynamics of managing the finances of a government

What is expected, according to Estrada, is that a budget that could meet the revenue to cover expenditure would be taken into account and that no deficit would later be generated that would cost debt and that limits the execution of a Government.

This article has been translated from the original which first appeared in PanAmerica