Panama: Forecasts point to economic growth of 4% in 2025; but the challenge is employment
The economic forecasts for Panama in 2025 point to moderate growth, with figures ranging between 3.9% and 4.2%, according to estimates by international organizations and the government itself. However, experts warn that this growth is not translating into employment, which represents one of the country’s main challenges.
The Economic Commission for Latin America and the Caribbean (ECLAC) projects growth of 4.2% for the Panamanian economy next year. For their part, the International Monetary Fund (IMF) and the Ministry of Economy and Finance (MEF) agree on an expansion of 4%, while the World Bank estimates a growth of 3.9%.
From the Faculty of Economics of the University of Panama, its dean, Rolando Gordón, agrees with official and international projections and predicts that the country could achieve 4% growth in 2025. However, he emphasizes that the central problem is not economic growth itself, but its weak impact on job creation.
“It is of no use to us to grow 4% if this growth does not generate jobs. The most important thing for the population is whether this growth translates into job opportunities, and it is not doing so”, Gordón warned.
The academic explained that the current economic expansion is concentrated in sectors linked to international trade, such as the Panama Canal, the railway, the banking sector and the airport. Although these areas are generating significant income, their level of hiring is limited due to the intensive use of technology and automation.
In the case of the Panama Canal, for example, despite the growth recorded in income during the first half of the year, the workforce remains between 9,500 and 10,000 employees, with no prospects for expansion. The same occurs with railways and banks, which, although they have reported good performance, operate with technological structures that require less and less personnel. “We are growing, but we are not benefiting the people below. Except for the Canal, the majority of companies that generate income are foreign and do not reinvest their profits in the country. That further limits job creation”, said the dean.
In addition, he warned about the outflow of foreign capital during the first half of the year. According to preliminary data, Panama registered a negative balance of foreign direct investment, since more money left than entered the country. “We are hopeful that this will not be repeated in the second half, but for now, there is no change in the trend”, he added.
Regarding the prospects for the labor market, Gordón expressed concern about the behavior of unemployment, which at the end of 2024 was 9.5%. The academy estimates that this figure could exceed 10% by the end of this year, given the lack of dynamism in employment-generating sectors such as construction, industry, agribusiness and agriculture.
Although the modification of the Preferential Interest Law, scheduled to come into force in January 2025, is expected to boost the construction sector, Gordón warns that there are still no clear signs of recovery in the short term. “Until now, the economy remains the same. There is no visible improvement and growth is vegetative in the sectors that could offer the most employment”, he concluded.
Cre: Mirta Rodríguez P, La Estrella De Panamá
