Panama: Economy slows significantly in Q1 on deceleration in infrastructure projects
June 30, 2014
In Q1 2014, the economy expanded 5.8% over the same quarter of the previous year, which was well below the 11.4% rise registered in the fourth quarter. The result marked the weakest growth rate since Q4 2009 when the global financial crisis took its toll on the economy.
The deceleration reflected a major slowdown in activities linked to the Panama Canal expansion as well as other large infrastructure projects, which have represented the main growth drivers in recent years. In Q1, construction growth slowed to a 16.1% expansion (Q4: +26.4% year-on-year), and mining and quarrying fell by more than half to a 12.3% increase (Q4: +31.0% yoy). The financial services sector, which has become an important pillar of the economy, also slowed (Q4: +8.3% yoy; Q1: +4.4% yoy). On a positive note, growth in transport, storage and communications–which accounts for roughly 20% of economic output–reached 7.7%, which was up from the 3.0% increase recorded in Q4.
Author: Carl Kelly, Economist