PANAMA Trends and Developments Contributed by: Belisario Porras, Patton Moreno & Asvat
Introduction In 2025, Panama’s President Jose Raul Mulino began his mandate with several challenges that required urgent attention. Fitch downgraded Panama to junk status in March 2024; S&P followed suit in November 2024 , pushing Panama to its lowest investment grade in years. The government successfully cracked down on illegal immigration, closing the Darien Gap, and was able to approve a reform of Panama’s social security system, which was undergoing serious financial and operational difficulties; dialogue with the Cobre Pan - amá mine is also under way, potentially looking for a reactivation of operations in 2026. In 2025, Panama’s economy demonstrated a robust recovery following the impact of the Cobre Panamá mine closure in 2024. While full-year final data is still being consolidated, key indicators for 2025 from most international financial organisations – including the International Monetary Fund (IMF) and the Economic Commission for Latin America and the Caribbean (ECLAC) – project a growth rate of 4.2% to 4.5% for the full year. The year began strongly with 5.2% growth in the first quarter, driven by a surge in the transporta - tion and canal sectors. By the second quarter, growth remained positive at 3.4%. The key economic drivers of the Panamanian economy for 2025 were: • transportation and logistics as the primary growth engine, which expanded by 26.2% in early 2025; • financial services intermediation, which grew by 7.1%, reflecting dynamic operations within the International Banking Center; • public infrastructure and construction activity, which was supported by a 20.7% increase in pub - lic works, including major projects such as Metro Line 3 and the fourth bridge over the Canal; and • tourism, where international visitor arrivals increased by 4.1% in the first half of the year, with general revenue rising by 7.6%. Following Panama’s exit from the “grey list” of the Financial Action Task Force (FATF) in 2023, the Euro - pean Union (EU) officially removed Panama from its list of high-risk third countries for money laundering on 9 July 2025. This trend will continue to encour - age trust in international investments as well as in the international financial sectors and the banking sec -
tor. Panama’s banking sector comprises total assets of USD148.8 billion in relation to Panamanian banks and USD26.72 billion in relation to international banks. Panama is still looking ahead and making important strides towards being removed from the EU’s blacklist of non-cooperative jurisdictions for tax purposes. In 2024 the “Niño” climatic phenomenon continued to produced one of the driest seasons on record, severely affecting the Panama Canal’s water levels and reducing them to historic lows. This caused a reduction in transits of 9,936, a 29% drop compared to the fiscal year 2023. Thankfully, in 2025 climate improved and the waterway reported strong increases in revenues and transits. Additionally, the trade envi - ronment has been marked by heightened volatility due to the new US administration trade policies prioritis - ing tariffs and domestic production. Therefore, coun - tries continue to seek alternative market routes and reshape supply chains. Tariffs imposed by the United States augmented transits, which jumped 19.3% to 13,404, compared to 11,240 transits in 2024. Of this total, 3,342 transits were by Neopanamax vessels, while 10,062 were Panamax vessels. The Panama Canal ended the fiscal year 2025 with total revenues of USD5.7 billion, 14.4% above the USD4.98 billion in 2024. The Panama Canal Authority (ACP) intends to carry out an ambitious investment plan for the next ten years, investing more than USD8 billion in projects directed to water availability, liquified petroleum gas (LPG) pipelines, road connections between the Atlan - tic and the Pacific, and the construction of additional container cargo terminals on both oceanic coasts. In the port sector, Panamanian ports ended 2024 by posting strong growth of 15.1% in container vol - ume. The volumes benefited from the Panama Canal transit restrictions during the 2023–2024 drought. In 2025, a surge of volume in cargo was primarily due to route expansions primarily from the United States and Asia as well as inducement calls from shipping lines – mainly feeder services from South America. As of October 2025, the total container volume increased by 3.3% to 8.24 TEUs, compared to 7.99 TEUs the year before, based on: • Cristobal on the Atlantic side posting the highest growth, of 11.4% to 1.03 million TEUs;
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