Looking for an Upturn
Panama's economy ran out of steam four years ago and it is struggling to meet deficit targets. The country is looking for new sources of economic fuel but it needs a major boost soon.
Panama's economy refuses to budge. GDP growth has averaged
barely 1% a year over the past four years and foreign direct
investment, which fueled the growth of Panama's financial
services industry in 1990s, has slowed to a trickle. The
country is struggling to meet budget deficit targets, but a
planned expansion of the Panama Canal, further development of
the land surrounding it and new trade agreements could give the
country the economic boost it needs. Panama passed a fiscal
responsibility law last year limiting the country's
nonfinancial public sector deficit to 2% of GDP. Domingo
Latorraca, Panama's economy vice-minister, says the fiscal
responsibility law should curb the country's debt levels, which
have topped 72.5% of GDP this year. "We recognize our medium to
long-term goal is to reach investment grade with the ratings
agencies, but the debt level is a yellow light," says
Latorraca. Moody's Investors Service rates Panama's
Already have an account?
Subscribe now for unlimited access to all current and archive news, data and market analysis.
Take a free two-week trial now for the latest news, data and market analysis.