Panama faces major fiscal and external challenges

Significance

Partial or complete lockdowns are taking a heavy toll on activity, with a pronounced impact on construction (down 70.5%), manufacturing (down 29.5%), hotels and restaurants (down 75.4%) and other personal services. Government services and private health services registered a positive performance (5.2%) during the third quarter but were unable to offset the collapse in the second.

Impacts

• Cortizo’s popularity will continue to suffer next year due to his management of the pandemic and its economic consequences.
• Protests demanding additional government support will gain momentum in 2021 on the back of Panama’s well-organised labour unions.
• Vaccine rollouts will boost hopes of recovery, but they will face challenges both logistically and in terms of uptake.