Panama GDP Q1 2021


Panama: Economy falls at a more moderate pace in Q1

July 19, 2021

According to a preliminary reading, GDP fell at a softer rate of 8.5% year-on-year in the first quarter, above the 10.9% contraction recorded in the fourth quarter of last year. Q1's reading marked the best result since Q1 2020.

The improvement was led by industrial output, which declined at a slower rate of 11.8% in Q1 (Q4 2020: -23.6% yoy), supported by soaring mining production, namely from the new copper mine, and also aided by manufacturing, which fell at a softer pace. However, the services sector contracted 9.7% annually in the first quarter, a slightly larger drop than the Q4 2020’s 9.4% decrease, as activity in the transportation and storage and the financial intermediation sub-sectors deteriorated. In addition, the agricultural sector contracted 0.9% in Q1, marking the worst reading since Q1 2019 (Q4 2020: +4.4% yoy).

Moving forward, a much more favorable base effect, a recovering global economy and recovering domestic activity should all support a strong reading in Q2.

On the outlook, analysts at the EIU added:

“A rebound in global activity will support Panama's recovery; we forecast that real GDP will expand […] despite a weak start to the year amid a second wave of coronavirus cases and a new lockdown. Our forecast for a rebound assumes that vaccine rollout allows activity to increase and the construction and logistics sectors to resume after being hit badly last year.”

FocusEconomics Consensus Forecast panelists project that the economy will expand 10.7% in 2021, which is up 0.1 percentage points from last month’s forecast, and grow 6.0% in 2022.

Author:, Junior Economist

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Panama GDP Chart

Panama GDP Q1  2021

Note: Year-on-year changes of GDP in %.
Source: Instituto Nacional de Estadística y Censo and FocusEconomics Consensus Forecast.

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