Panama Economic

The economy seems to be gaining steam in the second half of the year, after a weak first half.
Economic activity sped up in the third quarter, although it remained subdued by historical
standards. A firming transport, storage and communications sector likely led the improvement,
as operations at the Panama Canal gathered strength in Q3. Moreover, construction activity
accelerated robustly in the quarter, while merchandise exports rebounded in the same period,
thanks to greater agricultural commodity shipments. In addition, operations at the Cobre Panama
copper mine should be ramping up in H2, and will boost industrial production in the period. On
the fiscal front, in late October Parliament approved the 2020 budget, which will be more austere
than the prior year’s in order to constrain rising public debt. Moreover, nearly one-third of the
USD 23.3 billion budget will be allocated to debt repayment.

Panama Economic Growth

The economy should find a stronger footing in 2020. Fixed investment will likely gain ground
due to infrastructure projects and the new government’s market-friendly agenda, while consumer
spending is forecast to remain fairly steady. Rising output from the Cobre Panama mine should
also buttress growth. Global trade protectionism, however, threatens the outlook.
FocusEconomics Consensus Forecast panelists project that the economy will grow 4.6% in 2020,
which is unchanged from last month’s forecast, and 4.8% in 2021.

Panama Economy Data

2013 2014

Population (million) 3.9 3.9

GDP per capita (USD) 11,841 12,758

GDP (USD bn) 45.6 49.9

Economic Growth (GDP, annual variation in %) 6.9 5.1

Consumption (annual variation in %) 7.2 6.5

Investment (annual variation in %) 21.1 8.7

Industrial Production (annual variation in %) 16.8 10.7

Unemployment Rate 4.1 4.8

 2013 2014

Fiscal Balance (% of GDP) -2.4 -3.2

Public Debt (% of GDP) 34.4 36.5

Money (annual variation in %) -10.2 31.0

Inflation Rate (CPI, annual variation in %, eop) 3.7 2.6

Inflation Rate (CPI, annual variation in %) 4.0 2.9

Inflation (PPI, annual variation in %) 0.2 -1.6

Benchmark Interest Rate (%) 6.74 7.12

Current Account (% of GDP) -9.7 -13.4

Current Account Balance (USD bn) -4.4 -6.7

Trade Balance (USD billion) -6.9 -8.9

Exports (USD billion) 19.6 16.8

Imports (USD billion) 26.5 25.8

Exports (annual variation in %) -7.2 -14.1

Imports (annual variation in %) -4.6 -2.7

International Reserves (USD) 2.6 4.0

External Debt (% of GDP) 150 156

 • Total external debt/ Exports (EDT/X)
2013=150/19.6=7.64
2014=156/16.8=9.3

• Total external debt/ GNP( EDT/GNP)

2013=150/12=12.5
2014=156/10=15.6

• Official Reserve/Total External Debt (RES/EDT)

2013=36578/150=243.8
2014=44256/156=283.7

• Official Reserves/ Imports (RES/M)

2013=36578/26.5=1002.94
2014=44256/25.8=1715.3

• Long term public and public guaranteed outstanding and disbursed/ Exports (DOD/X)
2013=250/19.6=12.8
2014=256/16.8=15.34

• Long term public and public guaranteed outstanding and disbursed/ GNP (DOD/GNP)
2013=250/12=20.8
2014=256/10=25.6

• Total debt services/ Exports (TDS/X)

2013=34.5/19.6=1.8
2014=36.5/16.8=1.6

• Total debt services/ GNP(TDS/GNP)

Interest Payment/ Exports (INT/X)
2013=34.5/19.6=1.8
2014=36.5/16.8=1.6

• Interest Payment/ GNP (INT/GNP)

2013=346/12=28.3
2014=500/10=50

Conclusion

In general terms, Panama fully complies with the requirements and criteria established for this
recommendation. In this context, it has a declaration system that applies to both entry and exit,
having a standard form and a procedure to follow in case of false declaration or lack of
declaration. The information obtained is shared with the FIU, with adequate coordination with
the other related authorities, as well as for international cooperation and assistance purposes.
Regarding the possibilities of seizing, retention and confiscation, the rules referring to smuggling
are applied.
However, it is not clear that the scope of the declarations measures covers all means of
transportation of foreign currency indicated by the standard, enunciatively mail and freight
transport. Also, there was no evidence to conclude that the legislation empowers the authorities
to obtain more information in the cases that are required