Article written: October 8, 2026
How fast will Panama’s economy grow in 2026?
Faster than the major lenders expected a few months ago. On October 7, the International Monetary Fund (IMF) wrapped up a two-week mission in Panama and raised its 2026 growth forecast to about 5%, up from 3.8%. The same day, the World Bank lifted its own estimate to 4.2%, from 3.9% in June.
Both upgrades follow strong official numbers. According to the National Institute of Statistics and Census (INEC), Panama’s GDP grew 5.5% year over year in the first half of 2026, and second-quarter growth reached 6.4%.
How Do the New Forecasts Compare?
| Source | 2026 forecast | Previous forecast | 2027 | 2028 |
|---|---|---|---|---|
| IMF | About 5% | 3.8% | 4% to 5% (medium term) | 4% to 5% (medium term) |
| World Bank | 4.2% | 3.9% (June 2026) | 4.1% | 4.1% |
| Government of Panama | 5% | – | – | – |
| ECLAC (Cepal) | 4.4% | – | – | – |
For context, the World Bank expects Latin America and the Caribbean as a whole to grow just 2.2% in 2026, down from 2.4% in 2025. That puts Panama at roughly double the regional pace. Panama closed 2025 with growth of 4.4%.
What Is Driving Panama’s Economic Growth in 2026?
The IMF credits Panama Canal transits, air connectivity, tourism, logistics, financial services and Canal-related investment. The World Bank points to commerce, the Canal, the logistics sector and some export activities as the engines behind the first-half numbers.
In other words, the same sectors that have carried Panama’s economy for decades, the Canal and the logistics and services built around it, are doing the heavy lifting again.
What Did the IMF Say About Panama’s Deficit and Debt?
The IMF noted that the non-financial public sector deficit fell to 3.7% of GDP in 2025, below the 4% ceiling set by Panama’s Fiscal Social Responsibility Law. Preliminary data suggest Panama will also meet its 3.5% target for 2026. IMF staff recommend going further, to 3% in 2027 and 1.5% by 2030.
The Fund considers Panama’s public debt sustainable in its base scenario, with a moderate risk of sovereign stress, as long as the government sticks to that fiscal path. Its main recommendation: use extraordinary Canal revenue to pay down debt rather than to fund more spending, and protect Panama’s investment-grade credit rating.
On taxes, the IMF said Panama’s tax collection is low and has been falling over time. It recommends modernizing tax administration, tightening controls on invoices and tax credits and, in the medium term, broadening the base of the ITBMS (Panama’s 7% sales tax) and reviewing its rate.
What Did the IMF Say About Panama’s Banks and Real Estate?
Panama’s banks came out well. The IMF described them as well capitalized, profitable and with past-due loans under control, and said stress tests show they can absorb shocks.
It did flag the areas regulators should watch: bank liquidity and exposure to construction, commercial real estate, preferential-interest housing loans and consumer credit. For property buyers, that is a reminder that lending conditions in those segments may tighten if regulators act on the advice.
What Risks Could Slow Panama’s Economy Down?
Both institutions named the same weak spots:
- Water and El Niño: a drought could again limit Canal operations. The IMF called water security a priority and noted that the Panama Canal Authority set aside $82 million for the Río Indio reservoir in its fiscal 2027 budget.
- Cobre Panama: the pending decision on the copper mine could affect confidence and growth either way.
- Port concessions: unresolved port contracts were also cited as a risk to investor confidence.
- Jobs: employment and real wages are growing more slowly than output, and labor informality is rising.
- Human capital: the World Bank said informality and skills gaps continue to hold back poverty reduction and private demand.
On the upside, the IMF said faster public investment, better water management, a more resilient Canal and a lasting solution for Cobre Panama could push growth above its base forecast.
Is Panama Still a Good Place to Invest in Real Estate?
Growth near 5%, a falling deficit and a banking system the IMF calls solid are the kind of fundamentals long-term property investors look for. At the same time, the warnings on construction and housing credit are worth keeping in mind when financing a purchase.
If you are weighing a purchase in Panama City, the beach or the highlands, Casa Solution can help you look at how these numbers translate to the specific market and property you have in mind.
Sources: La Prensa (IMF), La Prensa (World Bank), La Estrella de Panamá.
This article is for general information only and does not constitute financial or investment advice.
