Panama's Economy, Trade, Investment Incentives, GDP, and Future Economic Growth Outlook

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Hiring Expectations Worsen in Panama

By the fourth quarter of 2020, 21% of companies in the country expect to reduce their payrolls, a proportion that is higher than the 14% registered in the third quarter of this year, a rise that is explained by the economic crisis generated by the covid-19.

Wednesday, September 9, 2020

Panamanian employers report negative hiring expectations for the October-December period. Three percent of the employers expect to increase their workforce, however, 21 percent expect to reduce it, while 68 percent remain unchanged, resulting in a Net Employment Trend of -18%.

Check out the "System for monitoring markets and economic situation in Central American countries", developed by CentralAmericaData.

Manpower's report details that hiring confidence is weakening in the four sectors that present data in quarterly comparison. The Trade sector reports a considerable decrease of 22 percentage points, while the Trends are 4 and 2 percentage points weaker in the Communications & Transport and Services sectors, respectively. On the other hand, Manufacturing remains relatively stable.

By the fourth quarter of 2020 "employers in all four sizes of business expect to reduce their workforces by the next quarter. Large companies report the weakest hiring plans with a -39% Net Employment Trend. Medium-sized companies report a negative hiring rate with a -26% Trend, while Small and Micro Business Trends are -15% and -8%, respectively," the report explains.

See full document (in Spanish).

 

https://www.centralamericadata.com/en/article/main/Hiring_Expectations_Worsen_in_Panama_1

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Slow Government payment stalls construction industry

Posted 20/10/2020

In the midst of a  reopening that is moving at a snail’s pace, the construction sector is pressing the Government to pay off the debts that it has with contractors that carried out large-scale state works before the pandemic and who hope to complete them in the new reality.

José Ramón Icaza of the Panama Chamber of Commerce board of directors asked the Government to update the accounts of the state contractors, to enable construction companies to reactivate more workers with suspended contracts.

" We are aware of multiple companies that have not been able to reactivate their large projects due to the backlog of accounts, " said Icaza in an interview with TVN-2.com .

Gabriel Diez, president of the National Council of Housing Promoters, joined Icaza's call and asked the Government to make payments so that companies that were developing state projects can finish the stalled works. The sector has been reopening some of its state works since July but so far, just under 60% of the projects have been able to resume the new normal and the reactivation of only 25% of the workforce has been achieved said, Icaza.

 

https://www.newsroompanama.com/business/slow-government-payment-stalls-construction-industry

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Panama: Economic Activity Recovers Dynamism

Due to the crisis generated by the covid-19, in May 2020 the economic activity registered its worst decline by falling 31% in year-on-year terms, however, as of June minor decreases were reported and in September the drop was 22%.

Thursday, December 17, 2020

The accumulated Monthly Index of Economic Activity (IMAE) from January to September 2020 registered a 18.3% decrease, compared to the same period in 2019, informed the General Comptroller of the Republic.

Check out the "System for monitoring markets and economic situation in Central American countries", prepared by CentralAmericaData.

According to the official figures, the sectors that were affected were: Hotels and Restaurants, Construction, Other community, social and personal service activities, Commerce, Manufacturing Industries, among others.

On a smaller scale, the following sectors were affected: Transportation, Storage and Communications, Financial Intermediation, Real Estate, Business and Rental Activities, and Electricity and Water.

According to the report released on December 16, 2020, "... some activities showed positive behavior such as: export of copper minerals and concentrates, telecommunications, generation of renewable electricity, export of fish and fish fillets (fresh, refrigerated and frozen), production of milk and its derivatives, cattle and pig farming, as well as private health services."

See full document (in Spanish).

 

https://www.centralamericadata.com/en/article/main/Panama_Economic_Activity_Recovers_Dynamism

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World Bank forecasts 5.1% Panama rebound in 2021

Posted 06/01/2021

The World Bank forecasts Panama will be among the leaders in Latin America in an economic rebound in 2021 with a growth of 5.1% in a new edition of the World Economic Outlook report in which it updated its growth projections for the world.

The Washington-based organization estimates that in 2021 the global economy will expand by 4%.

For Latin America and the Caribbean as a whole, a growth of 3.7% is calculated for the recently launched fiscal year. Like the rest of the countries in the region, Panama will go from a strong contraction in 2020 to a rebound in 2021.

The multilateral bank maintained its contraction projection for 2020 at 8.1%, a more optimistic estimate than the latest ones made by local analysts, which point to a drop in gross domestic product of around 14%.

Meanwhile, in 2021 the agency believes that the economy will return to the growth path with a rebound of 5.1%, an estimate slightly lower than the 5.3% that it had projected last October.

If this calculation is met, Panama would be among the fastest growing countries in the region.

The Economic Commission for Latin America and the Caribbean forecasts a growth of 5.5% for Panama in 2021, a performance that would only be surpassed by Peru.

Local estimates range between 4% and 7% growth, although they could be adjusted depending on the evolution of the new coronavirus pandemic.

 

https://www.newsroompanama.com/business/world-bank-forecasts-51-panama-rebound-in-2021-1

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Tax Amnesty to Reactivate the Economy

In order to reactivate the Panamanian economy that has been damaged by the outbreak of covid-19, the Ministry of Economy and Finance will present to the National Assembly a bill to extend the tax amnesty and approve new tax relief measures.

Tuesday, February 16, 2021

The Cabinet Council, led by President Laurentino Cortizo Cohen, authorized, today, the Minister of Economy and Finance, Hector Alexander to present to the National Assembly, the bill extending the tax amnesty, as well as new tax relief measures with a view to reactivate the national economy, explains an official document.

Check out the "System for monitoring markets and the economic situation in the countries of Central America", prepared by CentralAmericaData.

From the press release of the Presidency of Panama:

February 15, 2021. In a conference room courtesy granted to the director of the General Revenue Directorate (DGI), Publio De Gracia, he sustained to the Cabinet Council, that as a result of the pandemic that the country is experiencing, it has become impossible for all taxpayers to avail themselves and take advantage of the benefits of the Amnesty and Prompt Payment Law recently expired.
In general terms, the purpose of this bill is to extend the benefits of the amnesty previously granted to allow taxpayers more time to comply with the payment of their tax obligations, thus benefiting the entire universe of taxpayers of the Republic of Panama, while seeking to increase the collection of taxes.
 
Regarding the Tax Amnesty, the following measures are approved:
 
-Extension of the term until July 31, 2021 for the payment of delinquent taxes as of December 31, 2020, with the remission of 85% of interest, surcharges and fines.
-Payment arrangements are allowed until July 31, 2021, paying 25% of the nominal tax due as of December 31, 2020, and allowing its cancellation as of December 31, 2021. Likewise, payment arrangements entered into under previous amnesty laws may be cancelled as of December 31, 2021.
-Payment arrangements made under the Prompt Payment Law, which were to be paid by April 30, 2021, are automatically extended until December 31, 2021 for outstanding payments to be made.
-A 5% discount is granted in the amount to be paid in Income Tax and Estimated Tax to those taxpayers who have a gross income of less than 2.5 million balboas with respect to their 2020 sworn return, and pay within the 4 months following the entry into force of this law.
-Extension of the term until July 31 to file certain reports and omitted returns that should have been filed by December 31, 2020, condoning 50% of the fine generated by this late filing, provided that the remaining 50% is paid before December 31, 2021 and likewise, all those taxpayers who have certain fines established in the e-tax2.0 system, may cancel 50% of such fine by December 31, 2021 and the other 50% is condoned.

Other tax relief measures:
 
-Considering the proposal of the Chamber of Commerce, the figure of capitalization of retained earnings in a fiscal period is reinstated, with a view to provide companies with greater liquidity and working capital.
-It is clarified in Law 3 of 1985, which regulates the preferential interest regime in certain mortgage loans, that the benefit is granted to the mortgaged property for the term of the loan and, therefore, it does not affect if there is a change of owner.
-The payment of income tax is facilitated for those taxpayers whose ordinary line of business is not the purchase and sale of real estate.
 
-The benefit for prompt payment of 10% of the real estate tax is extended until April 30.

 

https://www.centralamericadata.com/en/article/main/Tax_Amnesty_to_Reactivate_the_Economy

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Panama: NO to Mandatory Rest Days Bill

The business sector opposes the bill that intends to stimulate the economy and local tourism, through the establishment of mandatory rest days and salary surcharges on the days of national events.

Thursday, February 18, 2021

This is Bill 487, which is called "Adopting a temporary regime of economic, cultural and national tourism stimulus, through the establishment of mandatory rest days and salary surcharges on national event days", which was presented to the Panamanian Assembly on September 28, 2020.

According to the initiative, a temporary Special Regime is established, for the Economic, Cultural and National Tourism Stimulus, which consists in the creation of the national event day.

"They will be national event days, the third Friday of the months of June, July, August, September and October of each year, in order to stimulate the economy, culture and national tourism. The days of national event will have specific denominations according to plans and programs that respond to public policies of the Tourism Authority of Panama and the Ministry of Culture" states one of the articles of the text.

According to Article 5 "... the work on the national event day for the workers of the companies described in Article 2 of this law, shall be paid with a surcharge of fifty (50%) and, as additional compensation, said rest shall be transferred to the Tuesday and Wednesday immediately following". See full text.

On February 17, 2021, the National Council of Private Enterprise (Conep) issued a statement in which it expressed its opposition to this proposal. In the document, the trade union explains that this is an unfavorable measure, since the salary surcharges would affect the productive sector, which today is in an unfavorable situation due to the crisis.

The ideal would be to receive initiatives that allow the reactivation of jobs and the generation of new jobs, rather than new charges to operating costs and expenses.

Conep proposes the temporary reestablishment of the law of bridge days (a holiday in the middle of the work week, which is moved to the following Friday or Monday).

 

https://www.centralamericadata.com/en/article/main/Panama_NO_to_Mandatory_Rest_Days_Bill

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Labor Market: Bill Receives Endorsement

On third debate, Panama approved the legislative bill that aims at gradually reintegrating employees to their companies, which have already restarted their activities and which in 2020 suspended labor contracts due to the crisis caused by the covid-19 outbreak.

Thursday, February 25, 2021

The National Assembly approved on February 24 bill No.542, submitted by the Ministry of Labor and Labor Development (Mitradel), which allows the gradual reinstatement of workers with suspended contracts, recognizes the payment of maternity leaves to workers with suspended contracts, the return of disabled people and establishes temporary measures to preserve employment and stability of the companies, details an official statement.

The document states that "... this bill rescues and reaffirms some elements of Law No.157 of 2020, such as the regulation of the termination of the employment relationship by mutual agreement and the total cancellation of the benefits to which the worker is entitled after the suspension."

With such norm, the reinstatement of workers is regulated gradually by economic sector, as follows: primary sector will have three months; the secondary sector six months and the tertiary sector up to eight months, adds the statement.

The document concludes that "... within the novelties of the project, Mitradel creates the National Unemployment Registry, with the purpose of having statistical data that will allow the promotion of clear public policies for the promotion of employment, being the first time that this data will be available and will be made viable through the computer platform of the Digital Government."

 

https://www.centralamericadata.com/en/article/main/Labor_Market_Bill_Receives_Endorsement

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Panama recovery could reach 5% - IMF

Alejandro Santos

Posted 28/02/2021

The International Monetary Fund (IMF) estimates that Panama's economic recovery in 2021 could be more pronounced than the 4% it had forecast in January.

Alejandro Santos, head of the IMF mission for Panama,  told La Prensa that the impulse will come from the side of the recovery of national economic activity as a result of a gradual reopening of all sectors, and as the pandemic recedes as a result of greater availability of the Covid-19 vaccine. As health-related concerns disappear, we expect Panama's economy to continue to grow again at its potential rate of 5% by 2022 and beyond. "

"Once the crisis is over, medium-term revenues can be strengthened by improving the technical capacity of the tax authority," said the economist

 

https://www.newsroompanama.com/business/panama-recovery-could-reach-5-imf

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Panamanian GDP Decreased 18% in 2020

The drop in production is explained by the performance of activities that were affected by the emergence of the covid-19 pandemic in March 2020, a situation that lasted for the rest of the year.

Wednesday, March 3, 2021

The Gross Domestic Product (GDP) valued at constant 2007 prices registered, according to calculations of the National Institute of Statistics and Census (INEC), an amount of $35,308.7 million, which corresponded to a decrease of $7,724.1 million, according to an official report.

Check out the "System for monitoring markets and economic situation in Central American countries" of CentralAmericaData.

The document explains that "... of the activities that were mainly impacted were those related to personal services, construction, commerce, hotels, restaurants, business services, industry, education and financial intermediation. However, there were activities related to the domestic economy that showed positive behaviors in the period, as a result of the increase in the number of health employees to face health events, by government services. And among other activities, the cultivation of rice and corn."

The report of the Comptroller of the Republic states that "... within the behavior of the economic activities related to the external sector, the following also stood out: the Panama Canal, port activities, the agricultural sector, banana production, fishing and the exploitation of mines and quarries, and the export of copper concentrate. On the other hand, the activity developed in the Colon Free Zone and air transportation showed decreases."

The GDP for the fourth quarter showed a negative behavior of 10.9%, compared to the similar period of the previous year, according to official figures.

See full report.

 

https://www.centralamericadata.com/en/article/main/Panamanian_GDP_Decreased_18_in_2020

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Latin America worst collapse since 1821

An increase in extreme poverty

Posted 21/03/2021

AFP, - The Inter-American Development Bank (IDB) predicted Saturday a difficult recovery of the economy in Latin America and the Caribbean due to the debacle caused by the pandemic, which will exacerbate poverty in the continent.

"The region will emerge from the crisis with greater indebtedness, more poverty and an increase in income inequality," the multilateral organization, said in a report.

According to the report, Latin America will grow 4.1% in 2021 after falling 7.4% last year, when there was the worst annual collapse on record since 1821. And it is "expected that this expansion will continue. slow down to 2.5 percent per year in 2022 and beyond, "

But the "shock" generated by mass unemployment will cause an increase in extreme poverty, which will jump from 12.1% to 14.6%, warns the IDB, and countries dependent on tourism and the export of raw materials will be particularly exposed to danger.

In addition, that forecast will depend "on the capacity to vaccinate" of the countries and on the fact that no new restrictions are imposed that "would have an additional impact on economic activity."

Otherwise, a negative scenario - based on lower economic growth in the United States and Europe, new virus outbreaks and a slow rollout of immunization - "would slow growth to only 0.8% in 2021", - 1.1% in 2022 and 1.8% in 2023, the agency said.

Since before the arrival of covid-19, "the region had already been losing ground in terms of its share in global GDP and the pandemic has only reinforced that trend,"

The continent has been one of the hardest hit by the pandemic. With only 8% of the world's population, Latin America and the Caribbean register around 25% of all deaths from coronavirus (733,000).

To avoid a catastrophic scenario, the IDB urges countries to undertake urgent fiscal reforms that improve spending efficiency, broaden the tax base, combat tax evasion, and reduce informality, among other measures.

 

https://www.newsroompanama.com/business/latin-america-worst-collapse-since-1821-1

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Panama: Economic Activity Still Down

In January of this year, the Monthly Index of Economic Activity reported a 15% year-on-year drop, which is similar to the behavior recorded from March to December 2020, a period in which the pandemic severely affected productive activities.

Tuesday, March 23, 2021

This index contracted considerably, due to the effects of the Covid-19 health emergency. Among the economic sectors that were affected were: Hotels and restaurants, other community, social and personal service activities, construction, commerce, financial intermediation, manufacturing industries, electricity and water, real estate, business and rental activities, and transportation, storage and communications, among others, according to the Comptroller General's Office of the Republic.

According to official estimates, some activities particularly registered positive results, such as: the export of copper ore and its derivatives, fish and fish fillet (fresh, refrigerated and frozen), renewable electricity generation, Canal tolls, telecommunications, container movement of the National Port System TEU, production of milk and its derivatives, as well as private health services.

According to a CentralAmericaData analysis, in this context of health crisis, Panama is the economy that at regional level shows the most damage, since in May 2020 the fall in economic activity exceeded 31%, and although in the following months production recovered dynamism, at the beginning of 2021 production is still depressed.

 

https://www.centralamericadata.com/en/article/main/Panama_Economic_Activity_Still_Down

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300,000 in Panama could plunge into poverty  

Posted 28/03/2021

Over 300,000 people in Panama could fall into poverty as a result of the effects of the Covid-19 pandemic and the country could experience a 7.1% increase in its poverty rate. It would go from 16.1% to 23.2%, despite the implementation of social relief programs, such as Panama Solidario.

A report by the  Inter-American Development Bank (IDB) released on Tuesday, March 23, talks about Central America, Panama, Haiti, Mexico and the Dominican Republic. The document focuses on inequality and social discontent in these countries The publication made an analysis of perceptions based on the measurement of the digital conversation and points out that "there is a process of citizen listening that is not being followed."

“Better listening to concerns is necessary, as well as greater transparency and accountability, which could improve the design of public policies,” says Marta Ruiz-Arranz, IDB advisor for Panama and other countries in the region. The document warns that the crisis revealed important gaps in the coverage of public services, such as health, education, and digital penetration, and delves into the determinants of inequality: low social spending, territorial imbalance, and poor education, among others.

 

https://www.newsroompanama.com/business/300000-in-panama-could-plunge-into-poverty-1

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140,379 jobs reactivated

Posted 01/04/2021

The Ministry of Labor (Mitradel) confirmed on Thursday that a total of 140,379 jobs have been reactivated,  49 %of the 284,209 that were suspended after the closure of activities decreed in March 2020 as a measure to contain Covid-19.

Until the cutoff of Wednesday, March 31, 2021, it is specified that of the 10,664 registered companies, 1% of the reactivated collaborators correspond to the primary sector. In addition, 26% are from the secondary sector and 74% from the tertiary sector.

72.1% of the reactivated contracts occurred in the regions of Panama and San Miguelito.

https://www.newsroompanama.com/business/140379-jobs-reactivated

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Economy and Outlook for 2021

The World Bank predicts that by the end of this year Panama and the Dominican Republic will be the economies of the region that will grow the most, and the countries that will report the lowest increases in their production will be Costa Rica and Nicaragua.

Wednesday, March 31, 2021

After the region's economies were considerably affected in 2020 by the sanitary crisis generated by the Covid-19 outbreak, the outlook of international organizations for 2021 is encouraging.

Growth forecasts for Latin American economies prepared by the World Bank and published in March 2021, indicate that Panama will grow 9.9% at the end of the year, the Dominican Republic 5.5%, Honduras 4.5% and El Salvador 4.1%.
 
Guatemala is expected to increase its Gross Domestic Product by 3.6%, Costa Rica's economy will grow by 2.6% and Nicaragua could increase its production by 0.9%.

Check out the "System for monitoring markets and the economic situation in Central American countries", prepared by CentralAmericaData.

According to the World Bank "... the sharp contraction caused by the pandemic last year had enormous economic and social costs. The unemployment rate in general increased and poverty soared, although in some countries the massive use of social transfers did much to cushion the social impact of the crisis."

For the international organization, the Covid-19 crisis will have a long-term impact on the economies of the region. Lower levels of learning and employment are likely to reduce future incomes, while the high level of public and private indebtedness may cause stress in the financial sector and slow the recovery.

Despite these challenges, there are positive areas. International trade in goods remained at a relatively good level, despite the sharp drop in trade in services, particularly tourism. Most commodity prices are higher than before the Covid-19 crisis, partly thanks to China's early recovery.  This is a good thing for exporters of agricultural and mining products. Remittances to the region are up compared to the pre-pandemic period, a very important issue for several Caribbean and Central American countries, according to an official document. Download full report.

 

https://www.centralamericadata.com/en/article/main/Economy_and_Outlook_for_2021

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Panama economy will grow 8-12% this year

Posted 07/04/2021

Panama’s economy will grow between 8 and 12 percent this year depending on which forecast you accept.  The International Monetary Fund (IMF) updated its growth projections for the world on Tuesday and in the case of Panama it predicts 12%; the World Bank projects 9.9%; Fitch Ratings agency expects 9.2% growth; while Moody's and the Panama Chamber of Commerce, Industries and  A agriculture are the least optimistic at  8%.

Part of the expected growth is explained by the fact of starting from a low base since the gross domestic product (GDP) contracted in 2020 due to the pandemic and restrictions on the economy.

The economist Felipe Argote said: “we fell so deep that the recovery is relatively simple. If we do not grow double digits, it is because nothing is done ”.

The Chamber of Commerce said yesterday that in its estimate it considers that activities such as the Panama Canal, ports, the export of copper ore, and gold among others, will lead to a rapid recovery.

 

https://www.newsroompanama.com/business/panama-economy-will-grow-8-12-this-year

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Foreign Investment Attraction: Creation of ProPanama

President Laurentino Cortizo sanctioned the law that creates the National Authority for the Attraction of Investments and Promotion of Exports of Panama, an institution whose objective is to attract foreign investment to the country.

Wednesday, April 7, 2021

The law establishes the legal framework for the Investment Attraction and Export Promotion Agency (ProPanama) of the Ministry of Foreign Affairs to be elevated to an Authority, to give it greater sustainability and to execute, in a strategic and channeled manner, the different public-private efforts to attract investments and support the promotion of exports, informed the Presidency.

Check out the "System for monitoring markets and the economic situation in Central American countries" of CentralAmericaData.

According to the official statement issued last April 5, ProPanama will have autonomous legal status under public law, with its own assets, autonomy in its internal regime and independence in the exercise of its functions, subject to the policy and guidance of the Executive Branch, through the Ministry of Commerce and Industries and the supervision of the General Comptroller of the Republic, in accordance with the provisions of the Political Constitution of the Republic and the Law.

"The attraction of investments and support for the promotion of exports are priority activities for the internationalization of the country's image and the optimization of the quality of these services, in addition to the application of best practices that allow the country to achieve the objectives of transparency and investment," the document notes.

According to the publication, "... the law creates a State entity 'with an efficient and modern structure that allows it to attract foreign direct investment and promote exports through the facilitation of investors by means of the implementation of public policies aimed at establishing instruments, strategies, programs, studies, promotion mechanisms, facilitation and agreement'."

 

https://www.centralamericadata.com/en/article/main/Foreign_Investment_Attraction_Creation_of_ProPanama

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Panamanian Consumer: Confidence Improves at a Slow Pace

During March 2021, the Panamanian Consumer Confidence Index increased 2% with respect to the level reported in January of this year, this slight increase is reported in the context of the economic reactivation process of local production.

Friday, April 9, 2021

According to the survey conducted by the Chamber of Commerce, Industries and Agriculture of Panama (CCIAP), in strategic alliance with The Marketing Group, expectations on the probability of saving money decreased 3 percentage points, presenting a result of 75 points, below the equilibrium point, for the measurement of March 2021, so it remains at levels of marked distrust.

See "How do Purchasing Intentions Evolve?"

"The perception of unemployment marks a 96 percentage point index. This indicator still remains within the levels of distrust, although with a slight improvement, of one percentage point, uncertainty still persists in this indicator", informed the CCIAP.

The report states that "... consumers' expectations about the economic situation of their households went from 112 points (January) to 116 points (March), showing a 4 percentage point increase. This result indicates that consumers have expectations that in the short term their household situation will improve.

The indicator on the outlook for the general economic situation of the country for the next 12 months increased by 7 percentage points, from 107 (January) to 114 points (March).  These results remain at a level of mildly positive confidence."

 

https://www.centralamericadata.com/en/article/main/Panamanian_Consumer_Confidence_Improves_at_a_Slow_Pace

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Panama economic activity 11 months in the red

Posted 23/04/2021

Panama’s monthly index of economic activity (Imae) registered a 9.73%  contraction in  February the eleventh month of negative production while in the first two months of the year there is a fall of 12.2%.

In 2020, as a result of the strict restrictions imposed by the Government to contain the spread of the coronavirus, activity levels fell significantly.

Last year, the first full month with quarantine and business closure was April and the Imae for that month reflected a 25.48% drop.

Since then, economic activity has not been able to shake off the red. As 2020 progressed and the restrictions became more flexible, especially in the last quarter of the year,  reports La Prensa the falls were moderating, but the measures adopted in January to contain the second wave of infections truncated the trend and deepened the downturn.

The sectors that had a negative performance are hotels and restaurants, construction, commerce, manufacturing industries, transportation, storage and communications, financial intermediation, real estate, business and rental activities, electricity, and water.

On the other hand, the export of copper ore and its concentrates, the tolls of the Panama Canal, telecommunications, the movement of containers in the port system, the production of milk and its derivatives, as well as private health services performed well.

Argote considers that the indicator for March 2021 should  begin to reflect an improvement compared to then

Thus, between March and April of this year, there should be a turning point and achange from red to black in the comparison of activity.

If the vaccination program is effective in controlling the pandemic and no new restrictions are imposed, the rest of the months of the year should improve performance in relation to the previous year.

Fitch Ratings, for example, projects growth of 9.5% this year, but it will not be until 2023 when the GDP level of 2019 will be reached, according to the agency's calculations.

The National Council of Private Enterprise presented to the Executive this week a package of 47 initiatives: with 31 focused on the financial, energy, industrial, agricultural, tourism, and construction sectors.

Those proposals would imply an investment of $4 billion and the generation of 140,000 direct jobs and another 68,000 indirect ones.

 

https://www.newsroompanama.com/business/panama-economic-activity-11-months-in-the-red

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Business Chamber seeks unity to create jobs

Posted 02/05/2021

With 288,951 workers losing their sources of income in 2020, which represents 15% of the employed population the new board of directors of the Chamber of Commerce, Industries and Agriculture (Cciap), announced that it has been planned to initiate a process of promotion and acceleration of the recovery of employment, in which workers, employers, and government work together.

This, in such a way that "they channel their energies towards the design and execution of policies and initiatives, both concrete and measurable, aimed at finding a sustainable solution to the health and socioeconomic crisis in which the country finds itself," said the Chamber.

To this end, the new leadership reported that it began a process of rapprochement with the main sector unions, the Federation of Chambers of Commerce of Panama and the Labor Foundation, in order to strengthen trust, understanding the needs and differences of criteria , with the aim of achieving consensus on comprehensive initiatives in the short term.

“This is the first step in the search for solutions that provide hope to people who are unemployed, with suspended contracts, or who have been forced to move to the informal sector,” said the Cciap.

 

https://www.newsroompanama.com/business/business-chamber-seeks-unity-to-create-jobs

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Construction investment down 49.5% but rebound begins

Posted 09/05/2021

Investment in construction in the first quarter ghfell 49.5%, although there was a notable rebound  in March. and The Panama  Construction Chamber (Capac) reports that all the projects that were paralyzed in 2020 are already active

According to the  Comptroller General between January and March, constructions, repairs and additions totaled $137.8 million throughout the country.

Although the  Capac reports 8,000 suspended labor contracts, most of them in state projects.

Jorge Lara, president r of Capac, said that demand continues to be low and it will not be until the end of the first semester when there will be a better perspective.

However, he commented that in March there was a 62% increase in cement production and a 0.5% increase in ready-mix concrete, a good sign of a recovery in the sector.

 

https://www.newsroompanama.com/business/construction-investment-down-495-but-rebound-begins

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Panamanian Economy Falls 6%

During March 2021, the Monthly Index of Economic Activity registered a -6% year-on-year variation, a decrease that is attributed to the effects of the sanitary emergency caused by Covid-19.

Friday, May 28, 2021

According to the most recent report of the General Comptroller's Office of the Republic, the Monthly Index of Economic Activity (IMAE) accumulated from January-March 2021 showed a decrease of 10.06%, compared to the same period of 2020.

The official analysis highlights that "... regarding the behavior of this index, in the first quarter, it continues to maintain a contraction, due to the effects of the sanitary emergency caused by COVID-19 on the economy. However, some of the economic categories that presented a good performance were: Mining, Fishing, Private Health Services and Public Administration."

The rest of the sectors maintained a negative incidence such as: Hotels and restaurants, Other community, social and personal service activities, Manufacturing industries, Financial intermediation, Construction, Commerce, Electricity and water, Transportation, storage and communications, Real estate, business and rental activities, among others, details the report.

Mining maintained a favorable performance, due to the export of copper ore and its concentrates. Fishing activity reported positive results, due to the higher catch of some export-oriented species, such as fish and fish fillet (fresh, refrigerated and frozen), shrimp and other seafood products, the document adds.

 

https://www.centralamericadata.com/en/article/main/Panamanian_Economy_Falls_6

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Colon Free Zone returning to life first quarter up 26%

Posted 01/06/2021

Activity in the Colon Free Zone (ZLC) in the first four months of the year showed an increase of 26 .2% compared to the same period last year with a balance of over $5 billion.

The Minister of Commerce and Industries, Ramón Martínez, has indicated that part of the modifications that will be made to Law 8 seeks to improve the international fiscal transparency of the ZLC, prevent money laundering, terrorist financing, and proliferation financing of weapons of mass destruction.

Despite this double-digit increase, the commercial movement of the second largest free zone in the world is 7.8% below the data reported between January and April 2019, prior to the pandemic

The ZLC ended 2020 with a total balance of $14.77 billion, about $3.792 billion less compared to the movement reported in 2019.

To boost commercial transactions and attract new companies to the ZLC, the Government sent a bill to the National Assembly that contemplates that multinationals that settle in the country under the manufacturing services regime (EMMA) can operate within the free zone located in the province of Colón.

Additionally, companies that operate in the free zone may apply the labor regime used in Panama Pacifico, which allows, among other points, a limit of 15% and not 10%, on the number of foreign workers.

 

https://www.newsroompanama.com/business/colon-free-zone-returning-to-life-first-quarter-up-26-1

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Panama risks  becoming “fallen angel”  - Bank of America

08/06/2021

BofA Securities, the investment banking division of Bank of America, warns that Panama risks becoming another Latin American “fallen angel”.

Some of the report's conclusions are a direct consequence of the economic slowdown caused by Covid-19; while others are the product of structural lags that now put the country in check.

"In our opinion, three variables will determine whether Panama becomes a fallen angel or not: economic growth, pension reform, and -why not- fiscal", it points out.

Comparing the country's performance with a soccer game, BofA Securities specified that in 2021, Panama is scoring a goal in its favor, with the resumption of economic activity -after the longest confinement in the region-, but on the other hand, it is receiving two goals against. Although "there is time" to overcome the scoreboard.

One of the goals against has to do with the disappointing financial results of the first quarter of 2021 and that the government has not yet begun to tighten its belt to curb spending.

The second goal against the party for maintaining investment grade is “the fact that the Government has neither a pension reform plan nor a fiscal adjustment plan. This is something that can make markets increasingly nervous. And it puts Panama at a disadvantage, from now on ”.

Still, BofA Securities has made an upward revision of its gross domestic product (GDP) growth forecasts for 2021 and 2022.

The GDP growth estimate went from 8% to 9.5% for 2021, and from 4.5% to 5% in 2022. The analysis takes into account the performance of data associated with trade (exports and imports), ports, the Canal, and the Colon Free Zone, in addition to the production of food, cement, electricity production, mobility, and consumer confidence.

 

https://www.newsroompanama.com/business/panama-risks-becoming-fallen-angel-bank-of-america

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Panama: Corporate Credit Decreases 16%

Between April 2020 and the same month of 2021, corporate credit to the local sector decreased 16% from $26,628 million to $22,386 million.

Tuesday, June 15, 2021

According to the report "Informe de Actividad Bancaria - Abril 2021", prepared by the Superintendence of Banks of Panama, consumer credit showed a 0.9% increase driven by mortgage credit.

The total non-performing loans rate of the International Banking Center (+30 days), stood at 3.6% in March 2021. As for the portion of the portfolio with arrears between 30 - 90 days, the indicator maintains a level of 1.7%, while loans in non-performing condition (arrears greater than 90 days), the indicator is 1.9%, highlights the official document.

See "What Financial Services Do Consumers Demand?"

The figures reported for April regarding the delinquency rate are supported by the relief measures dictated by the regulation, where there is a sort of freeze in the delinquency percentage, which is possibly not being computed. The low economic activity and the high level of unemployment will undoubtedly lead to a possible deterioration of the portfolio when the moratorium expires, according to the report.

The aggregate figures detail that as of April 2021, credit to the local sector recorded a balance of $54,100.8 million, with a decrease of $1,670.8 million (-3%) compared to the end of April 2020. This decrease is due to the lower performance of credit to the private sector.

 

https://www.centralamericadata.com/en/article/main/Panama_Corporate_Credit_Decreases_16

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Panama economic recovery at 8.2% by 2022

Posted 09/07/2021

Panama’s economic recovery will lead the region with a growth of 8.2% in the gross domestic product (GDP) by 2022, according to the report of the Economic Commission for Latin America (ECLAC), released Thursday, July 8, on the economic impact and of the Covid-19 pandemic.

In 2020, when the pandemic appeared, GDP closed at -17.9% and for  2021 the recovery is projected at 12%, according to ECLAC. However, it still does not reach the GDP growth levels of 3.7% in 2019, before the health crisis.

At the regional level, ECLAC raised its average growth estimate in 2021 to 5.2%, a figure that denotes a rebound from the deep contraction of 6.8% recorded in 2020 as a result of the adverse effects of measures adopted to combat the pandemic.

According to the United Nations, this expansion will not be enough to ensure sustained growth since the social impacts of the crisis and the structural problems in the region have worsened and will continue during the recovery stage.

The blow of the pandemic in the economies of Latin America has been catastrophic when compared to the rest of the world since 1.2 million deaths are registered due to the disease, which is equivalent to 32% of the world's total of deaths. Latin America only represents 8.4% of the world population, that is, the percentage of deaths is four times more than the percentage of the world population.

Vaccination
In Latin America, 13.6% of the population has been vaccinated, well below the percentages in other regions such as Canada and the United States, where 46.3% of the population is already vaccinated.

Among the 31 Latin American countries, Panama has 13.6% of the population with complete vaccination, below other countries in the area such as Cuba, with 13.8%; Colombia, 14.6%; Mexico, 15.4%; Costa Rica, 15.9%; El Salvador, 17.9%

“The panorama is complex and if we do not make the changes, if we do not eliminate once and for all the culture of privilege expressed in evasion, in illicit funds and tax expenditures and excessive concentration of wealth, we will not be able to get out of this low growth trajectory ”, warned Alicia Barcena, executive secretary of ECLAC.

 

https://www.newsroompanama.com/business/panama-economic-recovery-at-82-by-2022