Panama: GDP declines at a softer rate in Q3
December 15, 2020
According to a preliminary estimate, GDP fell at a milder pace of 23.6% year-on-year in the third quarter, above the 38.2% contraction tallied in the second quarter.
Services output fell 18.4% in the third quarter—marking a strong improvement from the second quarter's 29.9% contraction—with the key transportation subsector contracting at a softer pace, likely on improved Panama Canal data as global economic activity recovered. Moreover, industrial activity contracted at a softer pace of 45.3% in Q3 (Q2: -65.5% yoy), amid milder declines in manufacturing and construction. Meanwhile, agricultural growth fell to 2.9% in Q3, marking the worst reading since Q2 2019 (Q2: +4.3% yoy).
Moving on to Q4, the economic decline should be continuing to ease, although momentum will remain constrained as lingering Covid-19-related restrictions hamper activity. The government announced the tightening of restrictions in mid-December, with expanded curfew hours, two total lockdowns over the Christmas and new year holidays, and the reintroduction of gender-based mobility restrictions. The measures threaten to spill over into next year and delay the recovery in activity.
Author: Frederico Teixeira de Abreu, Junior Economist