The external sector linked to trade and logistics, as well as construction and tourism, is holding back Panama's growth and generating little optimistic expectations for the first nine months of this year, according to an analysis released today by a local business association.
The Chamber of Commerce, Industries and Agriculture of Panama (CCIAP), which groups more than 1,600 companies, said Friday that its Center for Economic Studies estimates that the country's gross domestic product (GDP) "is reflecting a growing trend to the downside "and that will close this 2018 with an expansion of between 4.2 to 4.5 percent".
For 2019 the projections of the Center for Economic Studies of the Chamber of Commerce, Industries and Agriculture of Panama (CEECAM) estimates about 5 percent of the GDP expansion, more or less the same as in 2017, when it grew by 5.4 percent according to official figures.
The Center for Economic Studies of the Chamber had predicted last April that the Panamanian economy would grow 5.4 percent this year, "below the optimum level of 6.5 percent," and that unemployment would reach 6.3. percent.
"The basic problem of the Panamanian economy is that one part is linked to international trade such as the Panama Canal, the Colon Free Zone, ports, tourism, which last year grew by 10 percent and, nonetheless, this year is growing at 5 percent," said the Chamber's study on Friday.
This includes the fact that the construction sector, one of the engines of the local economy, "maintains a decrease as a result of the strike in April that had a significant impact on other economic activities in the country".
The construction strike promoted by unions for wage claims lasted a month and cost between 100 and 300 million dollars to the economy, according to private and public estimations.
It was a blow to a sector that in 2016 represented 14.9 percent of GDP but has been declining for several years: its activity in the private sector fell by 48 percent in the first quarter of this year, compared to the same period of 2017.
The Chamber also said Friday that the country's consumption is falling, among other reasons, due to the decline in tourism.
It added that 100 percent of Panamanian consumers who are working, 41 percent do not have a high school diploma and traditionally filled vacancies in trade, agriculture and construction, sectors that are not currently hiring staff.
In this context, the Chamber said that the preliminary results of a survey applied to its members showed that 60.1 percent and 53.4 percent of businesspeople believe that their sales and income will be lower in the second and third quarters of this year, respectively.
"We should not think negatively, Panama has many investment opportunities, since some companies are investing in the gas area, and that business generates multiple activities," said the director of the Center for Economic Studies of the Chamber, Manuel Ferreira.
He added that mining, the Panama Canal, and works such as the expansion of the Tocumen Airport, which serves the Panamanian capital, "are contributing to the dynamism of the local economy", although he maintained that "changes and actions are needed to promote" growth.
Panama's President Juan Carlos Varela has called for more efforts to attract foreign and local private investment, after the IMF announced on June 1 the reduction by one percentage point of the country's growth projection for this 2018, initially calculated at 5.6 percent.