LatinNews Daily - 29 March 2023

In brief: Panama’s gov’t hails economic recovery

* Panama’s economy & finance (MEF) minister Héctor Alexander has presented a report to the national assembly highlighting that the country has “overcome the economic effects caused by the Covid-19 pandemic in a complex international context, marked by the war in Ukraine, global price increases and the adverse economic effects stemming from the pandemic in various countries”. According to the MEF report, Panama’s GDP growth in 2022 was 10.8%, while the country’s GDP in 2022 (totalling US$76.5bn) exceeded that registered in 2019 (US$69.7bn), the year prior to the pandemic which caused Panama’s GDP to contract 18% in 2020. Panama’s strong recovery was also highlighted in the latest Article IV consultation report by the International Monetary Fund (IMF), which was published on 24 March. The report states that while recovery has been “very strong”, the “outlook is uncertain”. It notes that while the fiscal deficit declined to from 10.4% of GDP in 2020 to 4% of GDP in 2022, “risks of new external shocks have emerged, including a sharper than expected downturn of the world economy, renewed surges of food and energy prices, and disruptions to global capital markets”. It also cited domestic risks including uncertainties about Panama’s medium-term growth potential given “construction is unlikely to provide the same support to growth as it has in the past decade and a half”, and the “prolonged inclusion” of Panama in the Organisation for Economic Co-operation and Development (OECD)’s Financial Action Task Force (FATF) grey list, among other things.

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