Panama’s economy will rebound in dazzling fashion in 2021, with the gross domestic product (GDP) expected to expand by 11 percent, according to a new forecast by The Economist.
The magazine points to several factors that will drive the economy in the year ahead, including consumer demand and private investment. The Cobre Panama copper mine will also provide a boost, with output expected to accelerate after the pandemic lull, with the mine forecast to produce more than 330,000 tons of copper and 145,000 troy ounces of gold per year, La Estrella reports.
The mine activity, along with the revenue from the Panama Canal, provides a solid foundation for Panama’s economy, the type of cash flow that helps the country manage the ebbs and flows of the global economy. Investment in the expansion of the metro system will also continue in the year ahead, which will help fuel economic growth.
The Economist made it clear that the recovery is still contingent on the end of the pandemic and the return to normalcy expected over the next few months. And the effects of the pandemic will be felt in different areas of the economy for at least the next year. Household income in Panama dropped severely during the pandemic and projects like a new bridge over the Panama canal are likely to see delays, the magazine notes.
But the trends are positive. Unemployment, which soared to 18.5 percent when the economy shut down last year, should slide to an average of 13 percent in 2021, the magazine predicts. Assuming a “more stable external environment,” The Economist forecasts that GDP growth will continue to expand at a dramatic 8 percent in 2022, before coming back to Earth with a more typical 3.6 percent average from 2023-25.
Those types of numbers are likely to lead the region and help cement Panama as the financial hub of Latin America.