Paraguay has emerged as a compelling destination for nearshore manufacturing, offering a blend of competitive operating costs, strategic access to regional markets, and favorable investment conditions. For site selection consultants and companies evaluating expansion or relocation in Latin America, the country’s most prominent industrial parks offer scalable infrastructure, labor force availability, and logistical advantages well-suited for international manufacturing operations. This overview explores the leading industrial parks in Paraguay and provides detailed insights into their business environment, infrastructure, and cost competitiveness.

Among the most well-established industrial parks in Paraguay are Zona Franca Global, Parque Industrial Oriente, Parque Industrial Pilar, Zona Franca Trans Trade, and Parque Industrial de Hernandarias. These parks are located in strategic regions such as Asunción, Ciudad del Este, Hernandarias, and Pilar, close to major transportation routes, borders with Brazil and Argentina, and waterways like the Paraguay and Paraná Rivers. Their geographic positioning facilitates cost-efficient shipping to Mercosur countries and access to major global shipping ports in Buenos Aires and Montevideo.

Access to Markets, Labor Pools, and Suppliers

One of the most attractive features of industrial parks in Paraguay is their proximity to Brazil and Argentina, two of the largest economies in South America. Companies operating within Paraguay’s maquila system can export goods to these markets with preferential tariffs. The Mercosur trade bloc ensures reduced barriers for regional trade, while Paraguay’s free trade agreements with several nations outside the bloc allow for diversified market access.

Industrial parks are often located near metropolitan areas, providing access to skilled and semi-skilled labor pools. The city of Asunción, for example, draws workers from its surrounding districts and offers strong connectivity to industrial zones like the Zona Franca Global. Ciudad del Este and Hernandarias also provide a workforce familiar with cross-border commerce and logistics due to their proximity to Brazil’s state of Paraná.

Suppliers are increasingly located within or near these parks, creating opportunities for vertical integration and lowering the cost of inputs. Electronics, textiles, auto parts, plastics, and food processing firms make up the majority of the current tenant base in these industrial zones, contributing to emerging cluster benefits.

Transportation, Utilities, and Energy Infrastructure

The quality of infrastructure in Paraguay’s leading industrial parks supports efficient operations for international manufacturers. Most parks offer paved internal roadways, 24/7 security, on-site customs services, and direct highway access. The country’s ongoing investments in road infrastructure, such as the Bioceanic Corridor and Ruta PY01 and PY02 upgrades, improve transit times to export points. Additionally, river ports like Villeta and Pilar, as well as overland connections to the Brazilian port of Paranaguá, serve as critical trade arteries.

Electricity in Paraguay is both abundant and cost-effective, thanks to the Itaipú and Yacyretá hydroelectric dams. Industrial users benefit from some of the lowest electricity rates in Latin America, typically between $0.03 and $0.05 per kilowatt-hour—with reliable supply. Telecommunications infrastructure has expanded significantly in recent years, with fiber-optic connectivity and mobile broadband widely available across industrial zones.

Water and wastewater services are generally provided on-site or via nearby municipal systems, although some industrial parks—particularly Parque Industrial Oriente—have developed their own water treatment facilities to meet environmental standards.

Labor Availability, Costs, and Training Programs

Paraguay boasts a young and growing workforce, with a median age of just twenty-nine. Wages remain among the lowest in the region, with average monthly salaries in manufacturing ranging from $350 to $550, depending on skill level and location. Labor laws are favorable for investors, offering flexibility in terms of contract types, probation periods, and work schedules.

Union activity in Paraguay is relatively moderate compared to neighboring countries, and most foreign manufacturers report cooperative labor relations. The government encourages worker-employer dialogue while maintaining a pro-investment stance.

Technical training institutions, including the Servicio Nacional de Promoción Profesional (SNPP) and private-sector initiatives, provide workforce development programs tailored to industrial skills. Some industrial parks collaborate directly with vocational schools to offer in-house training for new tenants.

Tax Incentives, Regulatory Environment, and Ease of Doing Business

The Maquila Law (Law 1064/97) remains the cornerstone of Paraguay’s investment appeal. It offers a 1% tax on the value-added portion of goods produced for export, duty-free imports of capital goods and raw materials, and simplified customs procedures. Additionally, businesses operating in Free Trade Zones like Zona Franca Trans Trade or Zona Franca Global benefit from full exemptions on income tax, VAT, and import/export duties for eligible operations.

Paraguay ranks favorably in regulatory efficiency among Latin American peers. Company formation can be completed in under 30 days, and ongoing compliance requirements are relatively light. Environmental regulations are enforced, but not overly restrictive. Industrial parks often offer permitting assistance and help tenants meet regulatory obligations, including environmental impact studies, when required.

Real Estate, Construction, and Operating Costs

Real estate costs are a key competitive advantage in industrial parks in Paraguay. Average lease rates for industrial buildings range from $3.50 to $5.00 per square meter per month, depending on location, amenities, and park services. Build-to-suit options are available in most parks, with construction costs averaging $400 to $600 per square meter—substantially lower than in Mexico or Brazil.

Operating costs such as waste management, facility maintenance, and security services are generally included in park service packages, which cost between $0.50 and $1.00 per square meter per month. Utility expenses remain affordable, with monthly electricity bills for medium-sized manufacturers often below $10,000, even with continuous production.

Logistics and Freight Costs

Paraguay’s logistics ecosystem supports competitive freight rates, especially for companies shipping to regional markets. Truck transport to ports in Buenos Aires or Paranaguá costs between $1,800 and $2,500 per container, depending on origin point and fuel surcharges. Inland waterway transport is also a cost-effective option; container barge services along the Paraguay and Paraná Rivers allow for bulk shipments at roughly 25–30% lower rates than road freight.

Paraguay’s strategic inland location allows manufacturers to distribute goods efficiently throughout southern South America. Exporters targeting Brazil’s industrial heartland or northern Argentina can reach key markets in under 48 hours by truck.

Tenant Mix and Cluster Development

The tenant mix in industrial parks in Paraguay is becoming more diverse and sophisticated. Textile producers, automotive suppliers, agri-industrial processors, and electronics assemblers make up the majority of current occupants. For instance, Parque Industrial Oriente hosts automotive component manufacturers, while Zona Franca Global has attracted technology firms and logistics companies.

This diversity supports the formation of industry clusters, offering companies access to shared labor pools, knowledge spillovers, and input suppliers. For example, electronics companies located in Ciudad del Este benefit from a regional ecosystem of distributors, warehousing services, and component importers. These cluster effects can help reduce production lead times and enhance responsiveness to market changes.

Moreover, the record of industrial parks in Paraguay in supporting global companies continues to grow. Firms from Taiwan, South Korea, Brazil, and the United States have established operations under the maquila regime. These companies report high satisfaction with the regulatory support, low costs, and responsiveness of industrial park management.

Conclusion

For site selection consultants and manufacturing companies seeking a nearshore alternative that combines cost-efficiency, strategic location, and regulatory simplicity, industrial parks in Paraguay provide a compelling option. With access to regional markets through preferential trade agreements, a competitive tax environment, and affordable infrastructure, Paraguay is well-positioned to support both labor-intensive and value-added manufacturing.

Companies can take advantage of low lease rates, low labor costs, reliable energy, and cluster benefits in established parks such as Zona Franca Global, Parque Industrial Oriente, and Parque Industrial Pilar. As infrastructure and logistics capabilities continue to expand, industrial parks in Paraguay are increasingly being recognized as prime hubs for nearshore production in Latin America.

With an adaptable regulatory framework, training institutions aligned with industrial needs, and a growing history of successful foreign investment, industrial parks in Paraguay offer site selectors the critical variables needed for long-term manufacturing success.

The Dominican Republic ranks among the leading job creation economies in Latin America during the first half of 2024, as per the Preliminary Overview of the Economies of Latin America and the Caribbean. The report, published biannually by the Economic Commission for Latin America and the Caribbean (ECLAC), shows that only a handful of countries in the region had robust and sustained employment growth.

The regional average stands at 1.7% – the lowest since the COVID-19 crisis. The Dominican Republic recorded employment growth of over 4% along with Bolivia and Chile.

The global employment growth recovery has been partial and uneven. While countries such as Brazil, Colombia, and Paraguay have shown marginal growth, it is slower than in previous years. Costa Rica and Peru reported contractions of over 1%, signaling a contraction in their labor markets.

Job Growth in the Dominican Republic: Sectoral Performance

Contrary to the regional slowdown, the Dominican Republic excelled in several high-impact sectors. Its success in job creation in Latin America can be attributed to strategic economic policies, sectoral growth initiatives, and a stable macroeconomic environment that fosters both domestic and foreign investment.

Industrial sector activity accelerates

Job growth in the industrial sector was particularly strong. Employment in the manufacturing and industrial sector expanded by 5% during the first half of 2024, putting the Dominican Republic at the top of the ranking, alongside Bolivia and Paraguay.

It is worth noting that the region suffered an economic slowdown in the manufacturing and industrial sector. Only the Dominican Republic and a few other countries have been able to accelerate the pace of employment.

The growth in manufacturing and industrial employment is due to several factors such as the promotion of export-oriented manufacturing, the development of free trade zones, public-private partnerships, and the expansion of value-added manufacturing and specialized industrial parks. In addition, increased investment in equipment, workforce training, and innovation has enabled companies to scale up production and remain competitive.

Construction surges

Job growth in the construction sector was another bright spot in the Dominican Republic. Employment in construction grew by more than 6% during the first half of the year, putting the country on par with Mexico, Brazil, Bolivia, and Nicaragua. Construction activity was boosted by monetary easing measures taken by the Central Bank of the Dominican Republic.

Interest rates were reduced, and access to credit improved, stimulating demand for residential and commercial construction, as well as large-scale infrastructure projects, such as highways, ports, and public buildings. Construction has a multiplier effect on the economy, as it drives demand for materials, boosts local consumption, and supports ancillary sectors such as transportation and manufacturing.

Services expansion

Job growth in the financial and business services was a testament to the formalization and strengthening of the Dominican economy. Employment in financial and business services expanded by more than 6%, positioning the Dominican Republic among the top six economies in Latin America.

The increase in employment in this sector is a sign of a maturing and more stable labor market that is shifting towards higher value-added activities. The growth of these services is driven by an increase in demand from new companies that want to formalize their businesses, as well as from international companies that are integrating with the local market.

Foreign direct investment in the financial sector, regulatory modernization, and digital transformation initiatives have created a more competitive environment. This has translated into an increased demand for skilled labor in finance and business support services, which tends to provide more stable and higher-paying jobs.

Basic services see double-digit expansion

The ECLAC report also registered growth in the Dominican Republic’s basic services sector, where employment increased by more than 10% between January and June 2024. The Dominican Republic was ranked alongside Argentina and Costa Rica in this pillar, which also includes electricity, gas, and water.

In 2023, the employment contraction in basic services was negative 8.8%. This recovery reflects strong growth in new employment opportunities, driven primarily by increased investment in energy infrastructure, renewable energy projects, and utility modernization.

The government-led initiatives in expanding rural electrification, as well as in upgrading water systems, have also generated thousands of jobs. This emphasis on utility modernization has positioned the country as a case study in job creation in Latin America, especially within essential service sectors.

Job growth outpaces regional peers

The Dominican Republic’s improved labor market performance is remarkable, given the overall regional employment dynamics. Latin America is grappling with complex economic headwinds, from inflationary pressures to fluctuating global demand, all of which weigh on job creation. In comparison, the Dominican Republic’s labor market data suggests a focused approach to generating employment and maintaining macroeconomic stability.

Job creation in the Dominican Republic rose by 1.57 percentage points in the first half of the year, the fastest in Latin America in 2024, against the regional average of 0.19 percentage points. Labor force participation also accelerated during the same period to the tune of 1.13 percentage points.

Compared to the labor force participation rate in Latin America of 0.43 percentage points, the Dominican Republic performed slightly better in this area. The low participation rate is an indication of how many adults in the country are not actively looking for work or are not available for work.

Labor participation stands for the total number of working-age people who are in the labor force, either employed or actively looking for a job. The low unemployment rate of the Dominican Republic is a testament to both the economy’s capacity to generate jobs and its citizens’ ability and eagerness to take them. The country’s continued rise in labor force engagement demonstrates how job creation in Latin America can benefit from clear policy direction and investment-friendly frameworks.

Low inflation target creates space for pro-growth measures

The Central Bank of the Dominican Republic had set a mid-point inflation target of 4% for the country in 2024, down from 4.5% in 2023. The low inflation target will continue to give the government room for maneuver in enacting other pro-growth measures.

Monetary easing to maintain competitiveness

Interest rates in the country have been declining since 2023. In 2023, it was cut to 8.38% in 2023 from 8.54% in 2022 and could come down further if the bank continues to ease monetary policy. The country will benefit from such interest rate cuts because the Dominican peso will become cheaper to use for business and purchases.

Reserves are expected to rise with lower government interest rates in the country. This will help banks and borrowers to invest more in the economy. The move is also likely to reduce the value of the peso, making imports and other services cheaper for consumers.

Conclusion

To conclude, the Dominican Republic’s robust employment growth is supported by activity in several major sectors, including the industrial and construction sectors. Its place as one of the leading economies for job creation in Latin America bodes well for the country as it is likely to attract investors that will, in turn raise the demand for the country’s labor.

Mexico: A Global Aerospace Manufacturing Powerhouse

Mexico has one of the highest growth rates in the manufacturing of aerospace components in the world. By the end of 2025, the aerospace industry will be among the 10 largest manufacturing countries in the world. Currently, the aerospace industry in Mexico is ranked 12th in the world in terms of export volume of components. The annual growth rate in the manufacturing of aerospace components in the aerospace industry in Mexico is around 14%.

Exports of aerospace components in the aerospace industry in Mexico set a record in 2023, having reached $9.4 billion. According to estimates for 2024, the export of aerospace components has already exceeded $10.7 billion, mainly due to the increase in demand from abroad. The Mexican Federation of the Aerospace Industry (FEMIA) values the local aerospace industry at $11.2 billion in 2025. The association also predicts that by 2029, the aerospace industry will reach $22.7 billion, which is an annual compound growth rate of over 15%. Aerospace manufacturing in Mexico has taken its place as one of the most important aerospace contributors on the planet.

Reasons

The continued influx of foreign direct investment (FDI) into the aerospace industry in Mexico has played an important role in the development of the industry. From 2006 to date, Mexico has received more than $3.745 billion in foreign direct investment in aerospace. In the first quarter of 2024, more than $119.4 million in FDI flowed into new aerospace projects, showing that aerospace manufacturing in Mexico continues to gather momentum. In 2025, Mexico was also in the top countries in the world in terms of attracting investment in the aerospace industry. For MNCs, Mexico is of interest as a country close to the U.S. market, with favorable trade agreements and a qualified labor force at low cost.

States in Mexico receiving the largest share of these investments in the aerospace industry are:

• 4% in Baja California, one of the oldest aerospace clusters with decades of experience.
• 2% in Chihuahua, specializing in the production of high-complexity components.
• 0% in Sonora, specializing in aerospace engine parts manufacturing.
• 3% in Coahuila, where manufacturing infrastructure is also expanding.
• 9% in Nuevo León, home to manufacturers of advanced components.
• 8% in Querétaro, a new center of engineering and MRO.

In all, 386 aerospace companies operate in Mexico in 19 different states, of which 370 are manufacturers. Collectively, the companies generate more than 50,000 direct jobs and more than 190,000 indirect jobs, supporting local communities and fueling broader economic growth in the region.

The aerospace industry in Mexico is also highly consolidated in terms of industry clusters. The most important elements of the aerospace industry, including manufacturing, R&D, logistics, and education, are combined into regional platforms that facilitate shortened supply chains and access to specialized labor.

Querétaro’s aerospace cluster, for example, is perhaps the most famous in Mexico, attracting global companies such as Airbus and Bombardier. Its airport serves as a hub for both cargo and MRO, while the local Aeronautical University in Querétaro (UNAQ) produces specialized talent for the engineering sector.

In Baja California, there is a long-established network of suppliers and a cluster of specialists in critical aerospace components and avionics systems.

Chihuahua is known for the assembly of complex components for engines and fuselages and is also home to a number of U.S. and European Tier 1 and Tier 2 suppliers.

In Nuevo León, local companies such as Frisa Aerospace and PCC Aerostructures have carved out a niche in advanced components, supplying to major OEMs worldwide.

Mexico Aerospace Fair (FAMEX)

This convergence is strengthened in both global supply chains and in the North American region by the USMCA (T-MEC), which has eliminated trade barriers for Mexican aerospace products in the U.S. and Canada.

Another important differentiator of aerospace manufacturing in Mexico in recent years has been the focus on technological development. In recent years, Mexico has already hosted certified parts manufacturers for leading global aerospace giants such as Rolls-Royce, General Electric, and Bombardier, such as Kuo Aerospace or Frisa Aerospace.

Approximately 13% of all aerospace companies in the country also invest in R&D. In the aerospace industry in Mexico, these activities are directed towards the creation of next-generation solutions in areas such as avionics, sensors, new lightweight materials, and additive manufacturing. Emerging companies such as Hydra Technologies are already at the forefront of UAVs, both for commercial and defense applications.

International collaboration has also contributed to this innovation. The aerospace industry in Mexico has increased its technological ties through joint ventures with European and Asian companies, while government-backed dual education initiatives have also been implemented to improve technical education and promote internationally recognized certifications.

Important in this competitive picture is, as in other sectors, the availability of qualified human capital. Aerospace manufacturing in Mexico already employs an increasing number of qualified personnel. Every year, the country has over 25,000 engineering graduates in the fields of mechanical, electrical, aeronautical, and mechatronic engineering.

This talent pool is further enhanced by vocational and technical training programs, often developed in direct cooperation with private companies, local governments, and universities. These measures aim to ensure that new graduates already have in-depth knowledge of the aerospace industry, including knowledge of international standards such as AS9100 and NADCAP.

The Mexican Space Agency (AEM) has also played an important role in advancing specialized knowledge and academic research in areas such as aeronautics, but also satellite technology. Overall, the alignment of academia, industry, and the government is paving the way for a more innovation-based and, in the long term, more sustainable aerospace manufacturing in Mexico.

Mexico Aerospace Fair (FAMEX)

In April 2025, Mexico’s Feria Aeroespacial México (FAMEX) once again brought together key companies in the aerospace sector in a major business and networking event. Considered the largest aerospace fair in Latin America, the 2025 edition was also a success, with 337 companies from 47 countries present.

The most important takeaways from FAMEX 2025 included:

• Signing of new agreements with aerospace companies from Canada, France, and Japan.
• Areas such as advanced air mobility, sustainable aviation technologies, and electric propulsion were also in the spotlight.
• Presentation of the Pegasus PE-210A national aircraft by Oaxaca Aerospace.
• Interest in satellite systems and orbital platforms continues to grow, both among new startups and through new public-private partnerships.

FAMEX has thus once again underlined Mexico’s strong image as a global aerospace location, not least for domestic innovation, but also to attract important foreign partnerships.

Infrastructure Development Supports Aerospace Industry in Mexico

The success of aerospace manufacturing in Mexico is also due to a constantly improving infrastructure. Important airports such as Querétaro International Airport or Felipe Ángeles International Airport (AIFA) have upgraded their cargo handling and MRO facilities to accommodate the growing volume of air traffic and, above all, to increase logistical efficiency.

In addition, state programs such as IMMEX, which regulates duty-free temporary imports for manufacturing purposes, or the USMCA, which has liberalized trade with the United States and Canada, continue to offer the industry a solid legal and trade framework.

Of course, the challenges are also described. While the largest aerospace clusters are well developed, infrastructure bottlenecks, in particular in logistics and transportation, persist in some areas. For sustainable growth, the country must also continue to harmonize its regulations with international standards and bodies in order to speed up certification and quality assurance processes.

Outlook

In the medium and long term, aerospace manufacturing in Mexico is expected to continue on a growth path with high momentum. The market research company Markets and Markets already expects that the aerospace industry will more than double in value and reach $22.7 billion by 2029.

Opportunities are particularly seen in:

• Global decarbonization targets and the development of sustainable aviation fuels (SAFs).
• Electric Propulsion Systems, in general, and Urban Air Mobility Platforms.
• Emerging fields such as satellite development or even small launch vehicles for telecom and remote sensing applications.
• AI and automation to increase efficiency in design, testing, and maintenance.

Mexico’s participation in international aerospace forums and standards organizations will also be crucial to ensuring that the industry is globally recognized and can access high-value markets.

Challenges in the Aerospace Industry in Mexico

Of course, the industry will also face several challenges in the future, and Mexico must deal with these if it wants to remain on a growth path. These include, among others:

• Dependence on foreign technology and suppliers, especially for high-value components and raw materials.
• Infrastructure limitations in secondary regions, which slow the development of aerospace clusters.
• Continuous development of human capital, particularly in specialized fields such as avionics, materials science or systems engineering.
• Concentrated investments in innovation, regulatory reform and, in particular, in a qualified education system will be crucial in the future if Mexico wants to address its structural weaknesses and achieve its competitiveness in the coming decades.

Summary

Mexico has established itself in recent years as a dynamic, attractive for investment and innovation-driven industry in the aerospace industry in Mexico. Driven by a combination of foreign investment, industry clusters, qualified personnel and support from the government, Mexico is taking its place as one of the key players in the future of global aerospace manufacturing. If the upward trend continues and the country succeeds in overcoming some of its remaining challenges, aerospace manufacturing in Mexico is on the way to becoming a global aerospace leader by the end of this decade.

Panama’s growth in the first few months of 2025 exceeded even the most conservative expectations for most economic indicators.

The Central American country’s Gross Domestic Product (GDP) for the first quarter of the year increased by 5.2%, according to figures from the National Institute of Statistics and Census (INEC). The Monthly Economic Activity Index (IMAE), for its part, shows a cumulative growth of 6.1% between January and April. These are numbers that, in other contexts, would be celebrated and indicate a year of strong start for Panama business growth.

Sectoral Engines: Canal, Finance, and Agriculture

Three sectors, in particular, drove Panama’s economy during the first months of the year: the Panama Canal, the financial system, and the agricultural sector.

After the water restrictions that affected Canal activity in 2024, 2025 started showing a vigorous recovery in the interoceanic waterway. Between January and April, the number of transits increased by 33%; the volume of goods transiting the Canal increased by 35%; and toll revenues increased by 42%. These results not only reflect the Canal’s recovery, but its leadership in an economy whose logistics is the point of articulation of most economic activities—an essential driver of Panama business growth.

The financial sector also reported strong figures, growing by 7.1% in the first quarter. As of April, the industry continued to benefit from an active banking system that has responded agilely to the recovery in demand for credit, particularly in the commercial and public sectors.

With more moderate growth, the insurance industry also added its share to the performance of the financial sector. Written premiums between January and April grew by 3.7%, driven by double-digit growth in individual life insurance, personal accident, health, auto, and technical insurance. Although this behavior would indicate a greater awareness of insurance among certain segments of the population, this remains a major challenge to achieve greater penetration in this market.

The agricultural sector also showed its relative robustness during the first months of the year. It grew 6.6% in the first quarter and continued to do well through April. Pineapple exports led the sector with a significant growth of 114%; watermelon exports grew by 18%, coffee exports increased by 17%, and banana exports grew by 9.7%. This was made possible by a recovery in international prices of certain agricultural products, which benefited specific export segments and reinforced Panama business growth in rural areas.

Moderate Performance in Construction and Commerce

In construction and commerce, both with more modest growth, other sectors also showed good performance: electricity, gas and water generation and distribution increased by 4.5%, hotels and restaurants, which are closely related to the tourist sector, grew by 4.7%, and real estate grew by 3.6%.

In more specific figures, the GDP of the construction sector grew by 1.8% in the first quarter, while the GDP of the commerce sector grew by 2.9%.

Construction was driven, especially by public investment, while private activity has shown signs of weakness. Between January and April, the production of ready-mix concrete decreased by 7.8%; the production of gray cement decreased by 5.1%; and construction permits decreased by 12.1%. This behavior would indicate a difficult second half of the year for the construction sector and create additional pressure on Panama business growth in this key industry.

Commerce, for its part, showed a mixed reality: retail trade activity increased, supported in part by an increase of 11.8% in sales of new cars. Wholesale trade, in turn, had setbacks, with re-exports from the Colón Free Zone (ZLC) decreasing by 2.5%. The ZLC, which continues to face external restrictions, increasingly aggressive competition from other regional logistics platforms, and an urgent need to reinvent its business model, remains a critical component of Panama business growth that requires modernization and innovation.

A Question of Infrastructure

Port activity during the first four months of the year grew by 2.5%, a percentage far below the growth rate of 16.8% recorded in the same period last year. These numbers suggest that Panama’s logistical infrastructure could have reached a saturation point. While Panama continues to enjoy a strategic position in the global logistics matrix, the platform available today has already reached a certain level of maturity that will require, in the short or medium term, either an expansion of capacity or the building of new ports.

The geopolitics and global scenario has become increasingly complex and sensitive, and Panama’s ports are not exempt from that reality: international trade tensions, external pressures, and delicate negotiations regarding control and operation of some key terminals in the country.

The Labor Market Gap

The most worrying statistic, however, is the one related to employment. Between January and April, the number of labor contracts registered with the Ministry of Labor decreased by 0.3%. This would point to a lack of formal employment generation that fails to keep pace with Panama business growth. Informality in the labor market continues to predominate and threatens to become more entrenched in the national economy. The unemployment rate in 2024 was 9.5% and labor informality 49.3%.

A Strong Start, and Storm Clouds on the Horizon

Despite the strong start, the panorama is not free of risks. The approval of the reform to the pension program of the Social Security Fund unleashed a wave of social protests that directly impacted the pace of growth in several key sectors, such as construction, banana production, exports, public education, among other activities sensitive to social unrest.

Teachers, construction workers, banana producers and Indigenous peoples took to the streets to express their discontent. Demonstrations were held in various parts of the country, with the province of Bocas del Toro becoming the epicenter of the unrest. Infrastructure projects were temporarily suspended and rescheduled, and sectors such as tourism, transportation, and commerce were indirectly affected, among other sectors due to roadblocks, restrictions on mobility and logistical disarticulations in various parts of the country.

By way of reference, the province of Bocas del Toro would represent a percentage of about 2% of Panama’s GDP. Banana production, for its part, would account for about 0.5% of the country’s GDP.

Budget Reduction

An additional element that will impact Panama business growth in 2025 will be the recently announced cut of up to $1.9 billion in the national budget. The main cut would affect the Central Government, which would see its budget reduced by $1.536 billion. The objective of the measure would be to comply with the ceiling of the deficit established by the Social Fiscal Responsibility Law, which limits it to 4% of GDP for the current year.

Achieving this magnitude in a budget cut represents a very difficult challenge. After accounting for public debt servicing (principal and interest), the Central Government’s operating and investment budget would be $9.863 billion (before the adjustment). The announced cut, in this case, would represent a reduction of 15.6%.

The rigidity of public spending, special laws that encumber a large part of the budget, ongoing public investment projects, and a population that is increasingly demanding services and solutions, make this a move with very little room for maneuver.

Absent the negative events described above, Panama’s growth this year could have been as high as 6.0%. However, in the new context marked by social tensions and fiscal adjustments, the GDP will close the year with growth closer to 4.0%.

These new projections converge with the figures presented at the beginning of the year, which foresaw a temporary deceleration of the economy due to the public reaction against the reform of the pension program of the Social Security Fund.

How to Sustain an Inclusive and Sustainable Panama Business Growth

The economic performance of the country this year has confirmed, on the one hand, that Panama has structurally resilient sectors that are capable of withstanding adverse scenarios. But it has also demonstrated the country’s vulnerabilities: an economy that grows without generating sufficient formal employment, a budget under pressure, an impatient society, and a logistics model that approaches its limit unless expanded and modernized.

It is not a question of how much the country’s economy will grow, but how it grows and for whom. Maintaining the rhythm of Panama business growth in the coming years will require more than a series of encouraging numbers in the short term: it will require the structuring of an economy that, within the global context, is socially stable, fiscally sustainable, and strategically located.

Consensus has to be built, without losing sight of an essential truth: an economy that does not generate real well-being, decent employment, and social cohesion, no matter how much it grows, will remain stagnant in its contradictions.

Argentina and France have taken a concrete step towards strengthening their bilateral economic relationship with the signing of a cooperation framework agreement for the mining sector. This accord aims to increase investment and financing in mineral resources for energy transition, especially lithium. This strategy gives Argentina a vantage point on international supply chains.

The French Minister for Foreign Trade, Laurent Saint-Martin, and the Argentine Secretary of Mining, Luis Lucero, led the signing of the memorandum of understanding in Buenos Aires, which both described as the start of a new era of cooperation between the two countries. Both stressed that the agreement establishes the mining sector as one of the strategic axes of relations between Argentina and France, as part of a commitment to decarbonization and the energy transition.

Framework agreement to increase French mining companies in Argentina

The framework agreement is intended to provide the platform for the articulation of long-term partnerships and French mining companies in Argentina, precisely for that purpose, the exploitation of the country’s lithium resources. Minister Laurent Saint-Martin has indicated that the document is a starting point for closer bilateral cooperation in the exploration and processing of these critical minerals. It will also allow France to attract companies and investments to the country in the short and medium term. “This will allow us to accelerate opportunities for French companies in Argentina and to promote sustainable mining development practices in line with European and global standards,” said the minister at the signing ceremony.

The Argentinean Secretary of Mining, for his part, emphasized the importance of the agreement to “work on the development of a roadmap with very clear deadlines”. According to Lucero, “Argentina and France will work on permanent technical and political dialogue to identify projects that can have tangible results and the potential to generate value for both countries.” The secretary has also assured that this document “is not just a memorandum of understanding, but the beginning of new actions and a joint agreement to give practical meaning to each of the objectives described in it.”

The Strategic Value of Lithium

Lithium, called “white gold”  by some is key to developing the batteries that power electric vehicles (EVs), laptops, mobile phones, and renewable energy storage systems. Therefore, in a world undergoing a massive energy transition towards green energy sources, lithium demand is on the rise, and Argentina is well positioned to play a significant role in the process of its supply.

The United States Geological Survey (USGS) estimates that Argentina has the world’s third-largest lithium reserves, behind Bolivia and Chile, which together are known as the “Lithium Triangle” in South America, a region that alone holds more than 50% of global lithium reserves and which is increasingly at the center of global battery supply chains. In addition, Argentina also ranks fourth in lithium production, behind Australia, Chile and China, according to the latest USGS data.

Argentinian lithium mining is open to foreign direct investment (FDI), unlike in some of its neighbors, which has created a more welcoming regulatory environment for international cooperation. Argentina’s lithium reserves are mostly salt flats located in the northwestern provinces of Salta, Jujuy and Catamarca, which are sparsely populated areas where the mining activity is more than just a business for the nation, but also means job creation and a motor for local economies, a factor that has been attractive for French mining companies in Argentina to take hold in the country.

Mining as a driver of economic development

Argentina is betting on the mining sector to diversify its economy and attract foreign currency, which it badly needs to reduce its fiscal deficit and inject dollars into its foreign currency reserves, and, at the same time, it also represents an opportunity to create jobs in an otherwise underdeveloped region.

In this sense, mining exports have become a growing source of income for Argentina over the years as the country has faced economic volatility, inflationary pressures and external debt. These exports are now part of Argentina’s overall strategy to promote mining not only as a short-term economic relief but as a step towards the country’s full integration into global value chains based on clean energy technologies. In this sense, the framework agreement with France to promote investment and financing in the sector is in line with Argentina’s vision of becoming a more reliable and responsible supplier of critical minerals to the world.

In addition to lithium, Argentina also has rich reserves of copper, silver, gold and other minerals which are vital for electrification and technological innovation. However, it is the former which is the most sought-after for most international cooperation efforts because of the key that it plays in the global energy transition. This means that there is a growing field of opportunity for French mining companies in Argentina which can expand their presence in Argentina, not only in lithium, but also in other critical minerals.

Technical cooperation and environmental standards

Another key aspect of the new Argentina-France agreement is its commitment to technical cooperation. France has much experience in sustainable mining practices and environmental protection, and it is clear that Argentina is also interested in incorporating the former into its local mining sector.

Technical know-how, training and joint research efforts are all expected to be important pieces of this bilateral cooperation. Environmental sustainability has already been a topic of great concern in the globalized world and, particularly in the mining sector, increased attention from consumers, investors and regulatory agencies has placed additional pressure on countries to be environmentally and socially responsible.

The two signatory countries have already expressed their intention to see that the future investments undertaken as part of this agreement will be made taking into account the strictest environmental and labor standards. The memorandum makes reference to, among other things, water management practices, community consultation protocols, and responsible mining operations, with a preference for low-impact extraction methods such as direct lithium extraction (DLE), which reduce the environmental footprint of mining activities. French mining companies in Argentina are expected to be in the lead on this front.

France’s growing investment footprint in Argentina

The latest agreement is but a reflection of broader trends in French investments in Argentina. French direct investment in the South American country grew 43% y/y in 2024, amounting to USD 7.6 billion across a variety of sectors, despite the challenging macroeconomic conditions in which the country finds itself.

A highlight of the sector has been the more than USD 850 million investment that French mining group Eramet has made in Argentina to launch the first commercial direct lithium extraction (DLE) plant in the country in Salta. This has made the company a pioneer in the region’s lithium production modernization efforts, and the facility is expected to increase significantly the nation’s lithium production. Additionally, the Eramet plant in Argentina also sets the standard as a model of sustainable extraction practices in the country.

Eramet’s investment is strengthening the French position in Argentina’s mining sector as well as highlighting the tangible benefits of the type of bilateral agreements like the one signed earlier this year. The plant is expected to begin production in 2025 and could eventually produce several thousand tons of battery-grade lithium per year. Its success will likely become a model for other French mining companies in Argentina as well as investors from other countries in search of similar socially responsible and economically feasible investment projects in the sector.

Argentina’s growing network of mining alliances

Argentina’s memorandum of understanding with France is not the first of its kind, or the most recent either. As Argentina has sought to use its wealth of mineral resources as a diplomatic tool in recent months, a series of similar agreements with other countries have been signed.

The latest have been with the United States (August 2024) and the United Arab Emirates (February 2024). By negotiating cooperation accords in mining, Argentina is aiming to establish itself as a major player in the supply chains that will power the electric vehicle revolution and the global renewable energy build-out. By reaching out to a broader group of countries than has traditionally been the case, Argentina is also trying to change its relationship with the world in a way that will make it less vulnerable to the risks associated with market fluctuations, political instability and overdependence on a single market for its exports.

This growing international network of mining alliances is also giving the Argentine government greater geopolitical influence in a world in which access to critical minerals is becoming more and more important as a source of national power and industrial competitiveness. It is also worth noting that with the global demand at an all-time high and a strong will behind Argentina’s mining diplomacy, it is very likely that this momentum will continue in the years to come.

The road ahead

The Argentina-France agreement for mining cooperation is a very important milestone for bilateral relations which will benefit both nations in economic, technological, and environmental ways. The future will prove how the world is heading in the cleantech revolution, but already it is safe to say that there will be a very important role for a secure and sustainable supply of critical minerals. Argentina has already taken important steps to position itself to play that role and by now it is acting with proactivity.

The road ahead for both countries will require the best efforts of both parties to implement the announced measures, find attractive projects to be invested and financed, and manage the complex environmental and social issues that often accompany mining projects. If successful, the Argentine-French framework could well serve as a role model for other countries seeking to develop equitable and sustainable cooperation in the sector.

For Argentina, this agreement represents one more step in its ongoing process of economic revitalization through the development of its natural resources. For France, the agreement marks a very strategic move to help guarantee access to inputs essential to its green industrial transformation. Overall, this bilateral agreement is a symbol of both nations’ converging interests in the common struggle for a cleaner and more sustainable future for everyone. It also helps solidify the growing role of French mining companies in Argentina as the agents of this process of innovation and international cooperation.