Over the past decade, Panama has been one of the fastest growing economies in the world, with an average annual growth rate of 5.6 percent over the last five years.
In the medium term, Panama’s growth is likely to remain one of the highest in Latin America. Public investments should also remain high, with planned construction of the third Metro line, a fourth bridge over the Panama Canal, the Colón Urban Regeneration project and other investments. In addition, the expanded Canal has already seen a boost to traffic and, especially, toll revenues, albeit at a lower level than may have been hoped for. This, however, could be at risk from protracted international trade disputes or a global economic turndown. Private investment should also remain strong.
Panama has made significant progress in reducing poverty in recent years. Economic growth and public transfers have helped reduce poverty substantially. Poverty continues to fall, irrespective of the poverty line (national or international) used. Between 2015 and 2017, poverty at US$5.5 fell from 15.4 to an estimated 14.1 percent while extreme poverty at US$3.2 declined marginally from 6.7 to an estimated 6.6 percent.
Despite the gains on poverty reduction, sharp regional disparities remain. Poverty prevails in rural areas, mainly inhabited by indigenous people. Access to basic services is not universal and remains linked to factors such as geographic location, education levels, ethnicity and income levels of households. For example, there are 11 years less in life expectancy for Indigenous women and men living in their territories (67.75) versus the overall population (79); and the maternal mortality rate is five times higher in Indigenous women who live in their territories versus the national average for all women (462 vs. 80 per 100,000 births).
Panama is well positioned to continue making progress towards the World Bank’s “Twin Goals” of ending extreme poverty and boosting shared prosperity, thanks to both growth prospects and the Government’s renewed attention to inclusion. Yet, sustaining high and inclusive growth over the medium to long term will require addressing some major blockages. These include improving education and skills in the country, as well as key infrastructure and the effectiveness of public institutions.
The Government’s 5-year Strategic Development Plan 2015-2019 rests on two pillars of inclusion and competitiveness and includes five themes:
- Enhancing productivity and diversifying growth
- Enhancing quality of life
- Strengthening human capital
- Improving infrastructure, and
- Improving environmental sustainability, including management.
Last Updated: Oct 22, 2018