Reforms to the Panama Social Security Fund (CSS), employment, the mining sector, the recovery of investment-grade credit ratings, the international context, and public fund management will be the key topics shaping the country’s economic dynamism this year. Panama is expected to maintain moderate economic growth in 2025, with projections ranging between 3% and 5%. Economic diversification and infrastructure investments are critical to this growth.
The Ministry of Economy and Finance (MEF), under the leadership of Felipe Chapman, estimates that real GDP will grow by 4% and nominal GDP will increase by 6%. These projections are complemented by those from JP Morgan, which estimates a growth rate of 5.2% for Panama, while Moody’s forecasts 4%. The Economic Commission for Latin America and the Caribbean (ECLAC) projects 3%; the International Monetary Fund (IMF) 2.5%; Barclays 2.2%; and the Economist Intelligence Unit (EIU) 2.0%. The World Bank (WB) has expressed that Panama should experience stable growth of 3% in 2025. However, the country faces economic challenges in Panama in 2025 related to inequality and the need for structural reforms.
Raúl Bethancourt, an economist and member of the Panama Association of Economists, mentioned that while the economic growth projections for 2025 are encouraging, “everything will depend on how the government manages reforms to the Social Security Fund (CSS) and decisions regarding the Cobre Panamá mine, located in Donoso, Colón province.”
More specifically, Allan Corbett, an adjunct professor in the master’s program at the University of Panama, explained that comparing government projections with those from international organizations reveals an inherent complexity in evaluating economic growth. International agencies typically adjust their estimates mid-year or year-end due to their cautious approach, which tends to be more conservative than government reports.
Sectors
Bethancourt commented that Panama continues to rely on traditional sectors to drive economic growth in 2025: ports, airports, tourism, and the Panama Canal. However, he emphasized the need to prioritize the industrial and agricultural sectors. “Infrastructure investments should not be confused with investments that develop the port and agro-industrial sectors,” he said.
Economist Víctor Cruz agreed with Corbett that the agricultural and industrial sectors, wholesale and retail trade, and banking sectors will drive growth and employment. Former Economy Minister Fernando Aramburú-Porras added that another sector that could boost the economy is mining if the government, with the approval of the population and the National Assembly, decides to reopen the copper mine under new terms that are “more favorable and sustainable” for the country. “This would also improve the investment climate in the country and boost employment and public finances,” Aramburú-Porras emphasized.
Social Security Fund (CSS)
Regarding the impact of CSS reforms on economic challenges in Panama in 2025, Aramburú-Porras stressed the importance of resolving the crisis in the Disability, Old Age, and Survivors (IVM) program, as it significantly affects the country’s risk profile and public finances. Credit rating agencies have highlighted the critical importance of CSS reforms.
According to Standard & Poor’s, successfully implementing these reforms is essential to improving the country’s fiscal sustainability and preventing the loss of investment-grade credit ratings. Corbett warned that unresolved issues with the CSS are a critical factor influencing social stability and economic growth.
“The lack of agreements on reforms that fail to provide a long-term solution could lead to social unrest and institutional distrust, negatively affecting foreign investment and domestic consumption,” he said. He also cautioned that any signs of instability or cuts to benefits could have adverse effects. “Uncertainty could lead to more conservative spending behavior, potentially slowing economic growth,” he noted.
Mining
Cruz believes the issue of the Cobre Panamá mine remains unresolved for now. He stated that decisions on selling extracted materials or reopening the mine would depend on achieving broad consensus, given the economic challenges in Panama in 2025 related to fiscal constraints.
Corbett, however, does not foresee any agreements during 2025 aside from laying the groundwork for negotiations on closure or compensation. He believes substantive negotiations would occur after 2025 when there is a more favorable political and economic environment for discussing exploitation or a definitive “no.”
Bethancourt emphasized that CSS reforms and decisions about mining are likely to create uncertainty, initially leading to social tensions that could threaten the country’s political and economic stability. This, in turn, could negatively influence macroeconomic projections unless confidence levels improve—a factor currently lacking.
Credit rating evaluations in 2025 could generate further uncertainty amid expectations that the government can attract foreign direct investment and secure better financing terms. Fitch Ratings recently upgraded Panama’s credit rating from ‘BB+’ to ‘BBB—.’ Similarly, Standard & Poor’s raised the country’s rating to ‘BBB—’ from ‘BB+,’ and Moody’s upgraded Panama’s debt rating to investment-grade status, moving from ‘Ba1’ to ‘Baa3’.
Economist Cruz highlighted that Fitch’s downgrade to investment-grade status represents another hurdle the government must address, as this rating affects both future financing needs and the willingness of foreign investors to invest in the country. He reiterated, “Investments, rather than operational spending, should be the government’s focus, as they improve the business platform and promote the foreign investments crucial for further energizing the national economy.”
Employment
In the labor market, employment consultant René Quevedo pointed out that between August 2023 and October 2024, 54,307 formal non-agricultural jobs were lost, according to the most recent Labor Report from the National Institute of Statistics and Census (INEC). These figures underscore economic challenges in Panama in 2025, particularly in the labor sector.
Quevedo noted that between January and October 2024, the Ministry of Labor processed an average of 23,700 new monthly contracts, nearly 9,000 fewer (-27%) than five years ago. He emphasized the urgent need to ease banking financing requirements for private companies, particularly micro-businesses, which form the backbone of employment generation in the country.
International Context
Panama’s economy is closely tied to trade and international investment flows. According to Bethancourt, one of the economic challenges in Panama in 2025 is navigating high interest rates in the United States, which could increase the cost of external financing and potentially reduce foreign direct investment.
Corbett highlighted that Panama’s economic growth in 2025 would depend on internal and external factors. Effective management of institutional challenges, economic diversification, and adaptation to consumer behavior trends will be crucial. “Panama’s ability to communicate and position itself internationally, especially in a changing political context, will be decisive for its economic future,” he concluded.
Budget and Strategic Plan
For 2025, the government of President José Raúl Mulino will operate with a General State Budget of $26.084 billion, representing a 15% reduction ($4.605 billion less) compared to 2024. This reflects the economic challenges in Panama in 2025, as the government balances fiscal discipline with the need to stimulate growth.