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.
Given the momentum generated by the Cobre Panama mine, growth in Panama this year is projected with a substantial acceleration with respect to last year (3.7 in 2018 versus 6 percent in 2019). The country ranks as the second fastest growing economy in Latin America and the Caribbean (surpassed only by St. Kitts and Nevis), in an environment where public investments have been high and private investment has remained strong.
However, in an increasingly competitive global context, this model could be at risk, since the economy has been based on traffic through the Canal and investments in infrastructure. Growth could also be affected from protracted international trade disputes or by a global economic turndown.
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: Apr 04, 2019