Panama's Growth Prospects: Determinants and Sectoral Perspectives

31 Pages Posted: 9 Aug 2017

See all articles by Kimberly Beaton

Kimberly Beaton

International Monetary Fund (IMF)

Metodij Hadzi-Vaskov

International Monetary Fund (IMF)

Date Written: July 2017

Abstract

This paper estimates medium-term potential growth for a country undergoing significant structural and secular changes. Our forward-looking framework, incorporating three analytical approaches for examining economic prospects, constitutes an important complement to typical backward-looking methods that filter or extrapolate historical data. In particular, the opening of the expanded Panama Canal in 2016 highlights significant structural changes underway in the Panamanian economy. We first analyze growth determinants and find that Panama is well-placed to maintain its business model, with improvements in education and governance important to support growth. Second, the current pipeline of investment projects can help sustain investment-led growth, although at a more moderate pace. Third, further development of the logistics and tourism sectors holds promise to further build on Panama's comparative advantage.

Keywords: Panama, Infrastructure, Investment, Economic growth, Tourism, Western Hemisphere, Potential output, Potential Growth, Growth Determinants, Case Study, Logistics, Infrastructures

JEL Classification: H54, O54

Suggested Citation

Beaton, Kimberly and Hadzi-Vaskov, Metodij, Panama's Growth Prospects: Determinants and Sectoral Perspectives (July 2017). IMF Working Paper No. 17/150, Available at SSRN: https://ssrn.com/abstract=3014080

Kimberly Beaton (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Metodij Hadzi-Vaskov

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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