Panama Industry (ann. var. %)

GDP growth records slowest increase since Q1 2021 in Q3

According to a preliminary estimate, GDP growth moderated to 9.5% year on year in the third quarter, from 9.8% in the second quarter. Q3’s reading marked the softest growth since Q1 2021.

The services sector grew 10.5% annually in the third quarter, decelerating from the second quarter’s 12.2% increase and marking the worst result since Q1 2021. Meanwhile, the industrial sector gained steam, growing 9.5% in Q3 (Q2: +8.6% yoy). Agricultural sector growth edged up to 4.8% in Q3, from the 4.5% increase in the prior quarter.

In Q4, available data suggests economic activity slowing further as lingering base effects work their way out of the series. As a regional trade hub, the country should continue to be affected by the global slowdown. That said, declining inflation throughout the quarter bodes positively for consumer spending, while the recovery in tourist arrivals should continue to support growth ahead.

On the outlook, analysts at the EIU stated:

“After Panama’s GDP recovered fully from the 2020 recession in 2022, a slowing global economy will dampen growth in 2023. Infrastructure, transport, tourism and rising output from the Cobre Panamá copper mine will drive expansion thereafter; the country’s services-oriented model will help to deliver average annual GDP growth of 4% in 2024-27.”

FocusEconomics Consensus Forecast panelists foresee the economy expanding 4.3% in 2023, which is down 0.1 percentage points from last month’s forecast. For 2024, the economy is seen growing 4.7%.