Economic activity suggests strong Q2 GDP outturn
Panama is one of the fastest-growing economies in the region as indicated by the strong expansion in June reported in the monthly indicator for economic activity. Furthermore, the annual average for the Índice Mensual de Actividad Económica (IMAE) hit its highest level in over two years. Transport and trade remain two of the sectors expanding most quickly, which has stimulated demand in the Colón Free Trade Zone. This has generated a pick-up in construction as public and private investment projects in the Zone gain momentum. In addition, cargo volume and movement along the Canal, which expanded last year, increased by double digits from January to July, indicating higher activity along the Panama route. The Canal Authority recently announced initiatives that will improve transit efficiency in order to capture a greater share of world trade in 2018 and 2019, which would generate positive spillover effects for the country as a whole.
The economy is expected to continue to grow at a respectable pace. Buoyant revenue from the Canal and ongoing investment projects should ensure stable growth in economic activity. The proposed government budget for 2018 would, if implemented, also expand infrastructure projects and public services spending, further boosting the economy. FocusEconomics Consensus Forecast panelists project that the economy will grow 5.5% in 2017, which is unchanged from last month's forecast. The panel expects GDP to expand 5.6% in 2018.