Panama’s Economic Growth Forecast For 2026 Revised Upward

• Fitch BMI has revised its GDP forecast for 2026 upward and expects 4.2% y-o-y growth by year-end, following a strong performance in the first half of the year. The country registered stronger-than-expected data for the first half of 2026, with the monthly economic index reaching y-o-y growth of 8.2% in June, the highest print since 2024.
• While Fitch BMI expects a slight slowdown during H2 2026, the robust economic performance has prompted it to raise its real GDP forecasts for the year to 4.2%, up from an initial 3.8%. This positions the country as the strongest performer in the Central American region for 2026.
• While most economic activities are showing a strong performance in 2026, specific sectors like transport, construction and retail trade are responsible for the boost of the local economy this year. High-frequency economic data reflect a strong dynamism in several economic activities, such as the 7.1% increase in transit through the Panama Canal in 2026 in part due to the ongoing conflict in the Middle East, which also raised its revenues to USD2.2Bn between January and June 2026, a 9.5% increase compared to 2025.
• In addition, private construction is picking up nationwide with a 23.2% y-o-y recovery during the first half of 2026 following a strong drop last year. Fitch BMI expects both indicators to remain strong for the rest of the year, with an additional boost to this year’s GDP from partial operations of the Cobre Panama mine and buoyant tourism inflows.
• Despite this sound economic performance, some economic activities, namely agriculture and the financial sector, are underperforming this year, which is coupled with constraints on domestic consumption due to high unemployment. Additionally, the financial sector reported a surprising -0.6% y-o-y real contraction in response to restrictive financial conditions and its negative impact on financial margins, while also reflecting a more cautious stance of financial institutions amid the current global economic and local uncertainty. These dampening factors point toward a softer economic performance in H2 2026, pulling the economy back from its mid-year pace.
• Risks on growth are tilted to the downside. Despite the strong performance in H1 2026, Fitch BMI flags geopolitical risks and potential climate impacts due to El Niño as some of the key risks for the rest of the year due to their potential impacts on purchasing power and transit through the Panama Canal. Added to that, the still unclear path towards a full reopening of the Cobre Panama mine limits long-term economic expectations for the country.
• As Fitch BMI has noted elsewhere, President Mulino authorised First Quantum Minerals earlier in the year to process and export ore stockpiled at the mine before its suspension, while a final decision for its full reopening is still pending. As the operation of this mining project contributed to about 5.0% of the country’s GDP in 2021, its reopening would boost the Panamanian economy further. However, the timeline remains unclear.

(Source: BMI, A fitch Solutions Company)