Panama: GDP growth slows in Q2 to over one-year low
According to a preliminary reading, GDP growth softened to 9.8% year on year in the second quarter, from 13.6% in the first quarter. Q2’s reading marked the slowest expansion since Q1 2021.
The services sector grew 12.2% annually in the second quarter, decelerating from the first quarter’s 15.0% increase and marking the worst result since Q1 2021. In addition, the industrial sector lost steam, growing 8.6% in Q2 (Q1:+13.2% yoy) amid dwindling growth in mining, manufacturing and construction output. Meanwhile, agricultural sector growth accelerated to 4.5% in Q2, compared to the 2.7% increase recorded in the prior quarter.
In Q3, available data suggests economic activity slowing further amid cost-of-living strikes throughout July, declining copper exports and a more adverse external environment. That said, a recovery in tourist arrivals and elevated public construction activity should support growth.
On the outlook, analysts at the EIU stated:
“Data in recent months have been a little volatile, reflecting the outsized impact of copper exports, which surged in May before falling in June, but the overall picture is of a slowing economy. The dampening effect of inflation on household purchasing power and business investment, a softer pace of new jobs creation, and the global economic slowdown are among the main factors that will weigh on activity.”