Comments, In Focus, Latin America

Panama’s economy: Slow and uncertain recovery

In a process inversely proportional to the Covid-19 pandemic, the economy in Panama begins to re-open slowly with results that are hardly visible to the majority.

Osvaldo Rodríguez Martínez

 

The commercial movement has already begun, but the merchants have given up complaining about lifting the quarantines or the mandatory curfews, and express disappointment that the influx of clients still doesn’t reach pre-health crisis levels, blaming it on lower incomes.

Many empty billboards, closed down private businesses, “for sale” or “for rent” signs, the depression of the real estate market and the domestic tourism that doesn’t take off, these are symptoms that the effects of Covid-19 have taken their toll on [people’s] pockets.

However, macroeconomic figures announce that the path to growth has begun, although for the most part the optimism of some state officials and economists is based more on forecasts by reputable international institutions than on the still weak signs of revival.

The steady transit of ships through the Panama Canal and the export of copper concentrate from the giant Donoso mine in Colón are, so far, the most tangible signs that Panama has started the upswing after bottoming out with a 17.9 per cent fall in Gross Domestic Product (GDP) in 2020.

Laurentino Cortizo, the country’s president, said last Saturday that “if we keep moving forward and working as a team in a disciplined way and advancing in the vaccination strategy, Panama’s economic recovery will be very good”.

The president trusts the predictions of the World Bank, the International Monetary Fund, The Economist magazine and the Economic Commission for Latin America (ECLAC), which consider that Panama will have one of the highest levels of economic growth in the region.

ECLAC executive secretary Alicia Bárcena recently told the newspaper La Estrella de Panamá that the country “prioritised health care, so by lifting many of these restrictions, a rapid reactivation in several sectors is being triggered”.

For the specialist, there is an immediate effect with the restart of practically paralysed sectors by allowing mobility, which gradually rescues global demand, and she pinned hopes on the upturn in construction with the execution of public and private investment projects.

She noted that three-quarters of the national economy is sustained by services, many of which depend on physical interaction, but health restrictions have virtually blocked many of these, which, as they gradually restart, also generate income.

Bárcena highlighted the monthly economic activity index indicator, which showed a growth of 4.8% in the first half of this year, compared to the same period in 2020, and predicted that, if this trend continues, it could close the year with a 12% increase.

Looking at society at large, the reality becomes less optimistic, and the recovery seems to be lost in the darkness of a tunnel with no way out in sight, as the unemployment rate has risen to 20%, while dozens of small businesses have closed their doors for good. The disappearance of formal jobs is equivalent to a reversal of a decade of job creation and those thrown into informality grew to one million, according to official estimates, making the scenario of recovery a possibility for some, but fiction for others.

What is certain, experts say, is that the gap in wealth redistribution is growing. (PL)

(Translated by Cristina Popa – Email: gcpopa83@gmail.com) – Photos: Pixabay

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