Panama will lead Latin America out of the coronavirus crisis to become the richest country in Latin America, according to the prestigious Moody’s rating agency.
This is a new forecast, taking into account current conditions, making it clear Moody’s sees little reason to doubt that Panama will bounce back quicker than most of its geographic rivals. The agency views Panama as “stable” and expects “strong growth” in the medium term, even if it might be lower than original expectations.
In terms of purchasing power, Panama will develop into the “richest country” in the region, due to the consistent flow of revenue from the Panama Canal and its developments as the logistics hub of the region, Moody’s concludes. By 2021, Panama will be the richest country in the region, in terms of purchasing power per capita.
Panama’s economy is based on strong fundamentals, not speculation or cycles, which is why Moody’s and the big financial institutions of the world see the country as a solid base. The pandemic will slow growth, but Panama is better positioned to recover and continue its expansion than most economies, Moody’s notes.
Several key factors work in Panama’s favor, including a sustained record of growth, strong institutions, progressive fiscal policy and the ability to recover from a disastrous event, Moody’s concludes. “A service economy that maintained a positive growth trajectory, favorable credit history with low refinancing without changing the risk rate, and a constant flow of income associated with Canal contributions” will help maintain Panama’s growth, post-pandemic, according to coverage in La Estrella.
Although the economy will contract in the months ahead, Moody’s expects growth to return to 4 percent in the medium term, with a forecast of a 3.7 percent rebound in 2021.