News

Panama’s economy continues to show resilience, with international credit agency Fitch Ratings projecting a 4.0% expansion in Gross Domestic Product (GDP) by the end of 2026. This positive outlook follows a strong first quarter where the Panamanian economy registered a 4.8% year-over-year growth.

The early 2026 economic expansion builds on the 4.4% growth achieved in 2025. The transportation sector has been a major driver, fueled by increased demand for Panama Canal transits due to ongoing conflicts in the Middle East. This momentum has been complemented by solid performances in both the construction and commerce sectors.

On the fiscal front, Fitch provided a favorable outlook for the government’s financial management. The agency estimates that the National Government will successfully meet its non-financial public sector fiscal deficit target of 3.5% of GDP. Panama also recently returned to international capital markets with a focus on liability management to reduce interest costs, though Fitch noted this strategy introduces some exchange and refinancing risks for upcoming debt maturities.

Despite the positive macroeconomic indicators, structural hurdles remain in the labor market. The Fitch report identifies the 10.4% unemployment rate and high levels of informal labor as persistent challenges for the local economy.

Looking ahead, a major catalyst for further growth could come from the mining sector. Following an independent audit in June 2026, the administration is evaluating options to resume operations at the Cobre Panamá mine, potentially under a state-owned model that would bypass the need for National Assembly approval. According to Fitch estimates, reopening the mine could add approximately 2 additional percentage points to Panama’s real GDP growth. Authorities are expected to make a final decision before the end of the year.

5 Things to Know

1. GDP is projected to grow by 4.0% in 2026.

   Fitch Ratings expects solid economic expansion throughout the year, following a strong 4.8% growth in the first quarter.

2. The Panama Canal is driving the expansion.

   Increased transit demand, alongside strong construction and commerce activity, is fueling the country’s economic performance.

3. Panama is on track to meet its fiscal goals.

   The government is expected to successfully hit its fiscal deficit target of 3.5% of GDP for the year.

4. Unemployment remains a persistent hurdle.

   Despite the GDP growth, the local market continues to struggle with a 10.4% unemployment rate and high informality.

5. Reopening Cobre Panamá could boost growth significantly.

   Resuming mining operations could add roughly 2 percentage points to the real GDP, with a definitive government decision expected this year.