Panama
In-depth country-focused analysis on Panama's economic, political and operational risk environment, complemented by detailed sector insight

Our comprehensive assessment of Panama's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Panama, as well as the latest industry developments that could impact Panama's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Panama before your competitors.

Country Risk

Panama Country Risk

Panama Country Risk

BMI View:

External Tailwinds Supporting Regional Underperformers

Core View

Central American outperformers Costa Rica and Panama are facing a more challenging road ahead in the coming years. As real GDP growth slows in Panama on the back of the end of canal construction, establishing fiscal discipline will be crucial. Should the country fail to rein in spending in an environment of lower growth, this would likely cool investor enthusiasm toward the country. Similarly, Costa Rica is also facing a challenging fiscal outlook, though we believe the country is more likely to embrace fiscal consolidation after a recent sovereign credit rating downgrade by Moody's.  

In contrast, our outlook for most of Central America's underperformers is brightening. Guatemala, Honduras and El Salvador will benefit from stronger US demand for their...

To read the full article Register for Free or Login

Panama Industry Coverage (10)

Agribusiness

Panama Agribusiness

BMI View:

BMI View: The Central America region continues to struggle with disease outbreaks in the coffee sector, which decimated the 2013 crop. We believe that coffee production will remain at risk over the next few years as the nature of subsistence farming will limit investment into safeguards. Countries in Central America are generally dependent on corn imports and we expect the corn production deficit to widen over our forecast period. Strength in the US dollar over this time frame will hurt the capital accounts of the region's countries. We expect Central America to remain self-sufficient in sugar and even increase its potential for sugar exports. The sugar industry has potential to attract investment over the medium term.

Honduras Agribusiness To Outperform
Select Countries -...

To read the full article Register for Free or Login

Autos

Panama Autos

BMI View:

BMI View:  The outlook for the autos industry in the Central Americas region in 2014 is modest, with tepid sales growth expected in some markets, but contractions likely in others. This is broadly in line with our outlook for the Latin America region, although many markets in Central America are very small in volumes terms, and modest changes in sales figures could have a relatively large impact on the year-on-year (y-o-y) growth rate. 

Income distribution across much of the region is highly unequal, and the majority of headline spending growth comes from the relatively wealthy sections of the population. This income structure is likely to continue to restrict growth in the regional autos sector.

To read the full article Register for Free or Login

Freight Transport

Panama Freight Transport

BMI View:

Moderate To Strong Freight Growth In 2015

2015 will see moderate to strong growth across the Central American freight industry. The positives will be a small acceleration in macro-economic growth and trade in most of the Central American economies, benefitting the dominant freight mode, road haulage, as well as boosting activity levels at some of the largest ports in the region. Air freight will see more modest growth, in the low single percentage digits. Despite some interesting efforts to rehabilitate some of the region's railways, it will take some years before any concrete results can be seen. In terms of industry news, the big headlines concern the expected increase in competition among ports when the widening of the Panama Canal is completed in 2016, and Nicaragua's extremely ambitious and enigmatic 'Grand Canal' project to compete with the Panama Canal. More immediately and pragmatically, we are tracking...

To read the full article Register for Free or Login

Panama Freight Transport

BMI View:

The growth picture across Panama's freight mix is set to follow a broadly similar pattern to the previous 12 months. Slowing growth will temper Panama's fiscal consolidation efforts in the coming years, ensuring the country fails to meet its fiscal deficit targets. This will prompt a modest deterioration in the country's debt metrics and see investor sentiment toward the country cool, which should not bode particularly well for Panama's freight industry. That said, the Panama Canal development is relatively well insulated from outside risk in that it is such a huge undertaking, as well as a necessary one.

Panama also faces an increasingly challenging medium-term fiscal outlook. Strong real GDP growth has long helped to paper over the cracks in Panama's macroeconomic credentials. Indeed, even despite the government regularly raising the deficit ceiling to accommodate higher spending, robust economic expansion has thus far ensured against a...

To read the full article Register for Free or Login

Infrastructure

Panama Infrastructure

BMI View:

BMI View: We currently forecast an average of 3.43.3% real growth in Central America's construction industry value for 20145 (excluding Panama) which is considerably higher than our regional average estimate for 2014 at 0.2% (excluding Panama). We expect Nicaragua's construction industry to return to positive in 2015 while Panama's will contract, as the completion of the Canal expansion nears its end.

We see high risks, small scale and limited growth opportunities across the region as a whole. A crucial factor underpinning our forecasts for infrastructure investments in future years is political and security risk. This is a particular concern in El Salvador, Honduras, and Guatemala where high levels of crime, homicide, violence, and insecurity exacerbate operational risks for companies willing to invest in those countries. As such, we believe that local and regional...

To read the full article Register for Free or Login

Insurance

Panama Insurance

BMI View:

BMI View: Collectively, the six insurance markets of Central America represent a medium-sized, and quite rapidly growing, market opportunity. The insurers themselves, and their corporate clients, have proven themselves to be resilient in the face of challenging business environments. Many companies are innovating in both distribution and products to increase insurance penetration in their markets.

BMI expect Central American insurance markets to continue to grow rapidly in the coming years. The annual average growth is forecast to be between 7.8% - 11.3% (Guatemala is the lowest and Nicaragua the highest).  We would highlight Panama and Costa Rica as markets which will outperform in absolute terms. Consumers in these insurance markets have the greatest ability to afford insurance and the insurance companies that operate are established and able...

To read the full article Register for Free or Login

Mining

Panama Mining

BMI View:

BMI View: Mining sectors across Central America and the Caribbean will see varying growth prospects in 2019. The region has significant untapped mineral potential, yet a range of business environments and operational challenges will lead to uneven growth. Overall, the mining sectors of Colombia and Panama will see the strongest longer-term growth, while Guatemala, and to a lesser extent Honduras, will underperform.

Colombia and Panama will outperform other countries in Central America and the...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

Panama Pharmaceuticals & Healthcare

BMI View:

BMI View: A growing ageing population, favourable tax incentives and high demand for medicines confirm Central America's ability to continue offering revenue-generating opportunities to foreign drugmakers. However, the region's growing preference for traditional medicines could interfere with productive sales in coming years.

Headline Expenditure Projections

  • Pharmaceuticals: USD3.7bn in 2014 to USD3.9bn in 2015; +5.6%. Our forecast has been revised upwards since Q115 due to historical data.

  • Healthcare: USD16.8bn in 2014 to USD17.8bn in 2015; +5.7 %. Our forecast has been revised upwards since Q115 due to revised historical data.

Risk/Reward Index...

To read the full article Register for Free or Login

Telecommunications

Panama Telecommunications

BMI View:

BMI View: Although the rise in number portability, with four out of eight countries having implemented or in the process of implementing a form of number porting, should encourage an increase in competition, BMI believes that it would be challenging for newcomers like Xinwei to penetrate the market. Mobile forecasts show much slower growth across the board, with only Nicaragua offering any real growth potential. Increasing government interference, as is the case of Guatemala, is a worrying new development.

Key Data...

To read the full article Register for Free or Login

Water

Panama Water

BMI View:

BMI View: This quarter has seen a significant expansion of the water forecasts, together with a revision of the existing data in order to factor in the new content. We now cover sanitation connections, water extraction from sources, mains consumption and mains household consumption, mains extraction by individual sector and losses. Overall, we believe the water services sector will benefit from a moderate uptick in investment into infrastructure, reducing losses and boosting supplies, however, the incremental population growth and limited demand for additional mains supplies reduces the likelihood of widespread sustained investment into the sector. This leaves limited opportunities for water infrastructure companies and we continue to see Panama as one of the least attractive regional water sectors in this regard.

The Panamanian government is dedicated to improving the quality of its...

To read the full article Register for Free or Login