The forecast for the Panamanian economy worsens
The impact to the Panamanian economy as a result of the crisis of the new coronavirus will be deeper than originally anticipated.
In April, after the first weeks of confinement and closure of many activities of the economy, the first estimates pointed to a 2% contraction of the economy
However, the health crisis is lasting longer than expected, both in Panama and in other countries on the continent, and therefore the paralysis or reduction of economic activity is also prolonged.
The Economic Commission for Latin America and the Caribbean (ECLAC) now foresees that the economy of Panama will register a contraction of 6.5% this year, that is, a fall of four and a half points, more severe than expected in April.
Similarly, the projections of local analysts have also been moving down as the crisis progressed. Manuel Ferreira, director of the Center for Economic Studies of the Chamber of Commerce, Industries and Agriculture, said last June that the annual contraction of the economy could reach levels between 7% and 10%.
Former Vice Minister of Economy, Domingo Latorraca, estimated this week that the drop could be 4.5%, while economist Felipe Chapman recently projected a contraction of 4%, although he anticipated that it could be revised downwards again.
The magnitude of the contraction will ultimately depend on how long the confinement and paralysis of activities continue, in addition to the effectiveness of the measures to promote economic recovery.
What seems inevitable is that the country registers the first recession after 31 consecutive years of growth.
Similarly, the projections for the entire continent and for other regions of the world are more discouraging.
Latin America and the Caribbean as a whole will decrease 9.1%, with marked contractions in large economies, such as Argentina (10.5%), Brazil (9.2%) and Mexico (9%). Even deeper will be the recessions in Peru (13%) and Venezuela (26%).
ECLAC notes in its report that, for the first time in decades, the Chinese authorities have not set an annual growth target, and the expansion of the economy is expected to be 1%, the lowest rate in more than 40 years. For the United States, the Federal Reserve projects a fall of 6.5%, while the European Central Bank forecasts an 8.7% reduction in GDP in the Euro area.
The fall in all regions will imply a substantial loss of employment. For Panama, the unemployment rate is estimated to climb from 7% to a rate of between 15% and 20%, according to central government estimates.
This would imply that some 400,000 people could face the difficult situation of being without their income.
However, the health crisis is lasting longer than expected, both in Panama and in other countries on the continent, and therefore the paralysis or reduction of economic activity is also prolonged.
The Economic Commission for Latin America and the Caribbean (ECLAC) now foresees that the economy of Panama will register a contraction of 6.5% this year, that is, a fall of four and a half points, more severe than expected in April.
Similarly, the projections of local analysts have also been moving down as the crisis progressed. Manuel Ferreira, director of the Center for Economic Studies of the Chamber of Commerce, Industries and Agriculture, said last June that the annual contraction of the economy could reach levels between 7% and 10%.
Former Vice Minister of Economy, Domingo Latorraca, estimated this week that the drop could be 4.5%, while economist Felipe Chapman recently projected a contraction of 4%, although he anticipated that it could be revised downwards again.
The magnitude of the contraction will ultimately depend on how long the confinement and paralysis of activities continue, in addition to the effectiveness of the measures to promote economic recovery.
What seems inevitable is that the country registers the first recession after 31 consecutive years of growth.
Similarly, the projections for the entire continent and for other regions of the world are more discouraging.
Latin America and the Caribbean as a whole will decrease 9.1%, with marked contractions in large economies, such as Argentina (10.5%), Brazil (9.2%) and Mexico (9%). Even deeper will be the recessions in Peru (13%) and Venezuela (26%).
ECLAC notes in its report that, for the first time in decades, the Chinese authorities have not set an annual growth target, and the expansion of the economy is expected to be 1%, the lowest rate in more than 40 years. For the United States, the Federal Reserve projects a fall of 6.5%, while the European Central Bank forecasts an 8.7% reduction in GDP in the Euro area.
The fall in all regions will imply a substantial loss of employment. For Panama, the unemployment rate is estimated to climb from 7% to a rate of between 15% and 20%, according to central government estimates.
This would imply that some 400,000 people could face the difficult situation of being without their income.