Panama: Economic activity speeds up in June
Latest reading: Economic activity rose 8.2% on a year-on-year basis in June, following a 5.2% increase in the previous month. June’s reading was the strongest since October 2024.
Commercial activity remained the main driver, supported by firm retail and wholesale trade, Colón Free Trade Zone re-exports and domestic fuel sales. Moreover, transport, storage and communications performed strongly, with strong Panama Canal activity boosted by the rerouting in global trade amid the Middle East conflict. Financial intermediation, manufacturing, hospitality, agriculture, leisure services, electricity and water and construction also contributed positively, the latter aided by building permits and public civil-engineering works.
On a month-on-month basis, economic activity rose 3.8% in June, following a 0.6% drop in the prior month.
Panelist insight: EIU analysts commented:
“Canal activity has provided a significant boost [to economic activity], benefiting from strong transit revenue and increased US energy shipments following disruption to the Strait of Hormuz. However, we expect this support to weaken in the coming months as vessel transit restrictions take effect amid water-supply constraints. […] An intensifying El Niño weather pattern is expected to reduce rainfall in the coming months, posing risks to hydroelectric generation and agricultural production. Although improved water management has strengthened Panama’s resilience to drought since the severe 2023-24 episode, a prolonged rainfall deficit could require deeper transit restrictions through the Panama Canal, limiting the upside from elevated shipping demand and weighing more materially on growth in 2027.”