Mid-term report: Good numbers but not on the Dean's List. Cabinet approves the 2024 budget. Microchips enter the economic scenario.
GDP growth for 2023 is expected at 6.2%, driven by internal demand, mainly consumption. The medium-term GDP projection has a less rosy outlook due to the likely end of the impact of the sharp Colon Free Zone sales to Europe in 2023, as well as mining output effects. Employment remains steady, but informal jobs constitute 48% of total occupation. The balance of payments is showing positive signs, with increasing foreign investment and sales of copper. Inflation is under control. On the fiscal front, the cash deficit is projected to remain within the limits of the FRL as of year-end, although key details of the 2024 budget are yet to be disclosed. So far, the political calendar is rolling as expected, although uncertainty surrounding the upcoming decision on Ricardo Martinelli's trial and party alliances may change the political game board. The US State Department (and the military) are exploring business opportunities in the semiconductor industry. A qualitative and quantitative boost in growth is crucial to enhance total factor productivity, which has declined by 2% annually.
In this report, we rate several key economic and political developments in Panama. We give grades, complemented by our outlook (positive, negative or stable) on the situation.
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