Panama’s economy grew 10% in the first half of 2021

RIO DE JANEIRO, BRAZIL – Panama’s gross domestic product (GDP) grew by 10% in the first half of this year over the same period in 2020, when the country’s economy was semi-paralyzed due to measures to curb the Covid-19 pandemic, which ultimately led the indicator to plummet by 17.9% that year.

The National Institute of Statistics and Census (INEC) on Friday reported that between January and June the GDP “reached an accumulated growth of 10.0%,” with a significant expansion of the indicator in the second quarter (40.4%) in contrast to the first quarter result (-8.5%).

In the second quarter, the Quarterly Gross Domestic Product (GDPT) reached an amount of US$9.1 billion, an increase of US$2.6 billion compared to the same quarter in 2020, said the INEC, an agency under the Office of the Comptroller General of the Republic.

“For the second quarter of 2021, mitigation measures and vaccination have been allowing health authorities to reduce or lift the restrictions imposed to contain the pandemic, helping economic activities to start their recovery process,” the statistics agency explained.

It pointed out that activities related to the domestic economy posting a positive performance in the second quarter were construction, transportation and communications, commerce, government services, health and real estate and business services, among others, while financial services posted downturns.

The items linked to the external economy posting growth were “mining and quarrying, by boosting the economy with the production of copper concentrate by 493.3%, and the Panama Canal, with an increase in toll revenues of 20.2%, mainly those related to the transit of Neopanamax ships by 21.5%.”

Port operations also grew as a result of the increased movement of TEU containers by 17% and re-exports from the Colon Free Zone by 62.4%, while banana, pineapple and fish exports posted declines, INEC added.

After last year’s 17.9% plunge, international organizations and risk rating agencies projected that Panama’s GDP would grow between 8% and 12% in 2021.

Local analysts alert that growth will be a “rebound effect” driven by sectors such as mining and not by the reactivation of the domestic market, since the necessary public and private investments have not been made to boost the sector, therefore they expect unemployment to remain at around 20% and informality at over 52%.

Sectors such as hotels and restaurants, manufacturing industry, financial intermediation, agriculture and livestock, and real estate, business and rental activities continue to be severely affected, according to official data.