Panama is projected to remain one of the fastest-growing economies in Latin America over the next two years, according to the latest outlook from the World Bank. The multilateral institution estimates that Panama closed 2025 with economic growth of 3.9% and forecasts an expansion of 4.1% in both 2026 and 2027, placing the country well above regional and subregional averages.
By comparison, the World Bank projects that Latin America and the Caribbean will grow 2.3% in 2026 and 2.6% in 2027, meaning Panama’s expected performance is nearly double the regional pace. This positions the country ahead of several of the region’s largest economies over the medium term.
Regional and International Context
The projections highlight a clear gap between Panama and its peers. Brazil is expected to grow 2.0% in 2026 and 2.3% in 2027, while Mexico’s economy would expand 1.3% and 1.8%, respectively. Colombia is projected at 2.6% in 2026 and 2.8% in 2027, and Chile around 2.1% in both years.
Within Central America, average growth is estimated at 3.6% in 2026 and 3.7% in 2027, supported mainly by Guatemala, Costa Rica, and Honduras. Even in this context, Panama is expected to outperform the subregional average.
Drivers Behind the Growth Outlook
According to the World Bank and national authorities, Panama’s performance is underpinned by a combination of private sector employment, economic diversification, and fiscal discipline. Key sectors supporting growth include logistics and services linked to the Panama Canal, commerce, telecommunications, and tourism, particularly segments focused on higher value-added activity.
Speaking at a recent business forum, Economy and Finance Minister Felipe Chapman stated that the projections reflect a broader consensus among international organizations, risk rating agencies, and multilateral lenders regarding Panama’s macroeconomic stability. He emphasized that the government’s strategy is focused on creating conditions for sustained private investment, formal employment, and stable income growth.
Growth vs. Living Standards
While the headline numbers are strong, economists caution that economic expansion alone does not automatically translate into improvements in quality of life. Independent analysts note that GDP growth does not measure how evenly income gains are distributed or whether productivity improvements reach the broader population.
Without targeted public policies aimed at reducing inequality, strengthening the labor market, and improving social cohesion, Panama could continue to experience solid growth alongside persistent income concentration. This distinction is increasingly relevant as the country enters a period of above-average expansion within a slower-growing regional environment.
Fiscal Management and Confidence
On the fiscal front, authorities point to efforts to modernize tax administration through digital tools and data analytics to improve collection and reduce evasion. Maintaining investor confidence and preserving the country’s risk rating remain central priorities, as they directly influence financing costs and long-term investment decisions.
Looking ahead, strategic investments in infrastructure, water systems, education, health services, and Canal-related projects are expected to play a decisive role in sustaining growth through 2027, especially amid global uncertainty and regional deceleration.
Outlook
Overall, the World Bank’s projections reinforce Panama’s position as one of the most dynamic economies in the hemisphere. The challenge moving forward will not be maintaining growth alone, but ensuring that this expansion translates into broader economic and social gains.
Article written on January 18, 2026
