Panama’s economy grows 15.3% in 2021

RIO DE JANEIRO, BRAZIL – Panama‘s gross domestic product (GDP) expanded by 15.3% in 2021, driven by the interoceanic canal and a large copper mine, thus recovering some of the ground lost in 2020, when the indicator collapsed by 17.9% due to the covid-19 pandemic.

According to data from the National Institute of Statistics and Census (INEC) released on Friday, March 4, by the Comptroller General of Panama, “the production of goods and services in the Panamanian economy, measured through GDP, presented an increase of 15.3% (in 2021), compared to the previous year.

The GDP valued at constant 2007 prices registered, according to INEC calculations, an amount of US$40.7 billion, which corresponded to an increase of US$5.4 billion, said a press release from the Comptroller’s Office.

The 15.3% increase in GDP reported by INEC is higher than the forecasts of international organizations, risk rating agencies, and local analysts, which had placed between 8% and 13% the expansion of the indicator in 2021.

In 2021 there was also “a significant improvement” in the public debt-to-GDP ratio, which stood at 63.7%, lower than the 68.5% it reached in 2020, according to the Comptroller General’s Office.

International risk rating agencies described Panama’s fiscal deterioration during 2020 as surprising, when this country, dollarized since its foundation in 1904, resorted to debt issuance to face the economic debacle derived from the almost total paralyzation of its economy due to the pandemic.

The Comptroller’s Office indicated that during 2021, it highlighted the expansion of the mining and quarrying sector “by continuing its dynamism and boosting the economy with the production of 331,000 tons of copper minerals”.

Also, the good performance of the Panama Canal, “with an increase of 10% in tolls, mainly due to the transit of neo-Panamax vessels (14.8%), as well as port operations resulting from the increased movement of twenty-foot equivalent unit (TEU) containers (11.5%).

The fiscal year 2021 was “exceptional” for the canal, with a record 516.7 million tons transited, 8.7% more than the previous year and 10% above 2019, said last October the Canal Administrator, Ricaurte Vásquez, who foresaw a more moderate growth for 2022.

The Comptroller’s Office also highlighted re-exports from the Colon Free Zone, the largest in the continent, which “increased by 23.8%” in 2021. Meanwhile, the domestic activities that showed a positive performance were manufacturing, electricity, construction, commercial, real estate, business activities, and other personal services. In contrast, activities related to the financial sector showed decreases.

Last January, the World Bank (WB) predicted that Panama, an economy dependent on services and highly exposed to the external sector, will grow 7.8% in 2022 and 5% in 2023.