Solid construction and Canal-based growth in June; the MEF fails to advance a minor but necessary fiscal reform

PANAMA - Report 27 Aug 2026 by Marco Fernandez and Jhonatan Astudillo

The acceleration of the IMAE to 8.2% in June from 5.2% in May reflects the confluence of three factors: a favorable base effect resulting from the disruption to economic activity in June 2025; a temporary boost to household consumption from Panama’s participation in the World Cup; and continued strength in external-facing sectors, particularly the Canal and the Colón Free Zone. We expect these tailwinds to provide less support during the second half of the year and therefore we maintain our 4.5% real GDP growth forecast for 2026.

In politics, the failure of the digital VAT-like proposal (a partial tax reform proposed by the MEF) reflects the difficulty the Mulino administration faces in advancing proposals to increase revenues.

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