IMF Forecasts ‘Dynamic’ Panama Economy

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IMF Forecasts ‘Dynamic’ Panama Economy

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The International Monetary Fund has released a report on the state of the Panama economy, concluding the country’s growth is “expected to remain among the highest in the region.”

Overall, the outlook for Panama is “favorable,” based on a range of factors, including “stable and low inflation, sustainable public debt, and a declining current account deficit.” Based on the group’s analysis, “Panama’s economy is expected to remain among the most dynamic in the region,” the IMF concluded.

The statements were part of a “concluding statement” developed by IMF staff after an official visit in the country. The statements represent preliminary findings and the release was approved by the authorities, according to the statement.

The IMF expects economic growth to pick up to 5.1 percent, with a near-term jump of 5.5 percent, which is a little less than the numbers released recently by the Panama government. In addition, inflation should rise moderately and the debt should decrease, in part due to the increasing foreign investment.

 “Panama’s growth model relies on its ability to remain a competitive and attractive destination for international financial, business, and transportation services,” IMF says. “Continued progress with tax transparency and financial integrity are essential to preserve this growth model.”

The main issue facing the country’s economy is “the backdrop of heightened external uncertainty,” a reference to the international situation outside Panama’s control. “Weaker-than-expected global growth or a shift toward increasing trade restrictions could lead to a slowdown in Canal activity, which could dampen Panama’s growth and government revenue,” the report says.

But the IMF also noted progress in Panama’s moves to convince the international community of its commitment to economic transparency. “The authorities completed several important policy actions over the past year,” the state notes, including a commitment to implement automatic exchange of tax information by 2018, ratification of the OECD’s Multilateral Convention on Tax Matters, and adopted key pieces of domestic legislation that “strengthen the revenue administration’s powers, and reinforce the accounting requirements for companies and foundations registered in Panama.”

The IMF’s full statement can be found here.

 

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