Reservations with economic growth forecast for Panama in 2021

Panamanians accepted the World Bank's (WB) projection of 9.9% economic growth this year with reservations, as they do not currently feel the recovery after the Covid-19 pandemic.

RIO DE JANEIRO, BRAZIL – ‘Growth, which may be high, may also conceal deterioration or lack of competitiveness of certain sectors’, declared economist Luis Alberto Morán to TVN channel, who recommended observing the sectors that fail to maintain their dynamic, so that recovery may be as equitable as possible.

‘Growth is not everything. This growth has to be sustainable. What worries is not the growth rate we reach but how this growth will be in the recovery period. What we currently see in the economy is sectors leading growth,’ he said.

Panamanians accepted the World Bank’s (WB) projection of 9.9% economic growth this year with reservations. (Photo internet reproduction)

In its biannual report, World Bank acknowledged that the nation is experiencing a high contagion level by Covid-19. The Gross Domestic Product (GDP) contracted by 17.9% in 2020 because it depends on air transport, retail, tourism, and construction. These activities have almost come to a halt.

The World Bank considered that poverty increased by 2% last year among Panamanians. In comparison, public debt soared by almost 20% in relation to GDP and warned the country to manage these credit explosions.

‘If we do not do something and control the indebtedness, the country’s finances can deteriorate much more. Therefore measures need to be taken to control the debt’, warned economist Rolando Gordón.

Until last February, the Central American nation owed US$38.4 billion to several international financial institutions, a figure which grew vertiginously in the last year by US$8.6 billion, according to official data.

Given this scenario, economists consider that the World Banks’s growth forecast is based mainly on the logistics sectors, including the inter-oceanic canal and mining activity, led by the colossus Cobre Panama, one of the largest in the continent.

The report admitted that Panama faces the challenge of reactivating economic growth and poverty reduction while balancing its fiscal accounts ‘to maintain its coveted investment-grade sovereign rating’.

The auguries point out that Panama and Peru will be recovery leaders in Latin America and the Caribbean, a region for which the World Bank foresees 4.4% growth this year, as it considered that productivity would increase due to business restructuring and digitalization, as a response to the shock caused by Covid-19.

Source: Prensa Latina

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