On May 5th, José Raúl Mulino, lawyer and politician, won the presidential elections in Panama for the period that begins today and ends June 30, 2029.The new president joined the electoral race as a replacement for former president Ricardo Martinellisentenced to more than 10 years in prison for money laundering and today asylum in the Embassy of Nicaragua.
At 65, Mulino has focused his campaign on job creation and pledged to promote tourism. He is still waiting to see what measures he will take on the border with Colombia, which he has proposed closing to prevent the passage of migrants. He also plans to build a railway line connecting the capital, Panama City, with the interior of the country, which will create jobs in the construction sector. He also promised to boost agricultural production, reduce the cost of medicines and guarantee free internet access in schools.
At the macroeconomic level, He has said that his focus in Panama (a country of more than 4.5 million inhabitants) will be employment, the President receives an unemployment rate that stands at 8.8%, a figure that has not yet recovered from the 14% peak of Covid-19.
Panamanian GDP and cost of living
Since the pandemic, when GDP contracted 36.2% in the second quarter of 2020, Panama began a period of constant growth and closed the last quarter of 2023 with a rebound of 3.3%, (although it has not yet reported the growth rate from January to March) it is one of the most resilient economies in Latin America, since between 2021 and 2023 it has not had negative quarters.
In fact, Panama’s GDP per capita is the second highest among Latin American countriesaccording to data from the World Bank, The country reports a wealth per person of US$15,388, only surpassed by Uruguay with US$18,215 (and not counting Guyana which is at US$17,646).
At the same time, the cost of living has remained within the Government’s targets, The fully dollarized economy closed May with inflation of 1.26%, the lowest among Latin American countriesand the first in the region to recover the Consumer Price Index from before the pandemic.
This shows that Panama has managed to position itself as one of the strongest economies in the region, surpassing several of its neighbors in terms of GDP per capita. This achievement reflects sustained economic growth and represents a challenge for the new president, who must maintain or improve these figures.
However, international agencies and entities see a slowdown in the growth of the Panamanian economy due to a slight stagnation in infrastructure projects, The Central American nation’s economy is forecast to grow 2.5% this year, according to the International Monetary Fundwhich would be its worst performance since 2009, excluding the pandemic.
Eyes on mining
One of the new government’s biggest ambitions is to find a way to reopen First Quantum Minerals’ $10 billion copper minePanama has been gripped by months of violent protests after the Supreme Court ruled in December that a contract for the mine violated the constitution and ordered it closed.
The project accounted for 5% of GDP and was a major source of tax revenue and exports. Fitch downgraded the country’s bonds to junk status in March, citing large fiscal deficits exacerbated by the loss of copper revenues.
S&P and Moody’s still rate Panama above “junk” but warn that there is a risk of further decline in the rating if the new government does not implement tax reforms and pensions, in addition to seeking to reopen the mine, said economist René Quevedo.
