By Katiuska Hernández

The Economic Commission for Latin America and the Caribbean (ECLAC) has published new economic projections indicating that the economy of Latin America and the Caribbean will grow by 2.1%, up from the previously projected 1.5%. In the case of Panama, the initial growth estimate of 4.2% has been revised downward to 3%.

The Panamanian economy will grow this year, but at a lower rate than originally estimated by the Economic Commission for Latin America and the Caribbean (ECLAC).

In December 2023, the organization projected that the Panamanian economy would grow at a rate of 4.2%. However, in the new revision published on Thursday, May 9, it is indicated that the growth will be lower, placing it at 3%.

This growth rate for Panama will be below that of other Central American countries. According to ECLAC’s projections, the Dominican Republic will grow by 4.5%, Costa Rica will also show a higher rate at 3.9%, as will Honduras and Nicaragua at 3.5% each, and Guatemala at 3.4%.

The 3% growth projected by ECLAC for the Panamanian economy is one of the highest estimates among international organizations. The International Monetary Fund (IMF) estimated that the economy would grow by only 2.5% this year, the same rate projected by the World Bank (WB).

The Panamanian economy grew by 7.3% in 2023 according to the Ministry of Economy and Finance, but this year, 2024, estimates from the current government point to 2.5%, in line with the estimates from the IMF and the WB.

Uncertainty Continues
For the entire region, ECLAC indicates that economic growth for this year will be 2.1%, up from the previous estimate of 1.5%. The organization states that South America will grow by 1.6%, Central America and Mexico by 2.7%, and the Caribbean (excluding Guyana) by 2.8%.

“The region is facing a complex international scenario characterized by economic activity and global trade growth below historical averages, along with high interest rates in developed countries, resulting in higher financing costs for emerging countries, including the region,” ECLAC states.

The organization adds that the expected low growth in 2024 is not just a cyclical problem, but reflects a decline in the region’s trend growth rate of GDP.

“The region is in a development crisis characterized by three mutually reinforcing traps: a trap of low growth, a trap of high inequality and low social mobility, and a trap of low institutional capacity and ineffective governance. These traps condition and limit the achievement of the United Nations’ 2030 Agenda and, therefore, the achievement of inclusive social development,” the report mentions.

Reference