Panama leak may exacerbate economic slowdown

Significance

The move comes in light of April 3's massive leak of documents from Panamanian law firm Mossack Fonseca. The fallout of the leak -- known as the 'Panama Papers' -- could seriously hurt Panama's important financial sector, causing severe and lasting reputational damage and ultimately slowing Panama's hitherto strong economic growth.

Impacts

• A slower-than-planned expansion of the IBC could have a negative impact on the services sector.
• Reputational damage could make it more difficult to restore important international banking relationships.
• A long-term reduction in such relationships could hurt the economy and be especially harmful for smaller Panamanian banks.