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 Industry Coverage (9)

Agribusiness

Panama Agribusiness

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BMI View:   The region is still struggling with disease outbreaks in the coffee sector in 2013/14. We believe the region will continue to suffer as low global coffee prices limit investment potential. Even if prices have rebounded recently, we believe they are overstretched and see them going back towards the USc140-150/lb level in the near term. Central America is generally dependent on imports for corn, and we expect the production deficit to widen over our forecast period. That said, Central America is expected to remain self-sufficient in sugar and even increase its potential for sugar exports. The sugar industry has the potential to attract investment over the medium term.

Coffee & Sugar Ahead Of The Rest
Central America - BMI Market Value By Commodity (% of total)...

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Autos

Panama Autos

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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.

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Freight Transport

Panama Freight Transport

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A deceleration in construction industry growth and a relatively slow expansion of the transportation and communications sector underpin our forecast for real GDP growth in Panama to moderate to 6.5% this year, from 8.3% in 2013. Nevertheless, we anticipate that a pick-up in construction next year, in advance of the completion of the Panama Canal expansion, will bolster headline growth in 2015 and proving a boon to the country's freight industry.

Latest data supports our view for a notable slowdown in Panamanian real GDP growth in 2014. Real GDP growth came in at 5.8% year-on-year (y-o-y) in Q114, the weakest print since 2009, as a work stoppage on the Panama Canal expansion project weighed on economic activity, and growth in the transport and communications segments remained relatively slow. With these factors set to persist in the next few months, we maintain our forecast for real GDP growth of 6.5% in 2014, down from 8.4% in 2013 (...

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Infrastructure

Panama Infrastructure

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BMI View: There is a wide divergence of performance and opportunities across the various construction industry markets in Central America. With comparatively low levels of risk, we expect Panama and Costa Rica to continue to lead both in terms of industry value and real growth. With regards to the region's underperformers, Guatemala and El Salvador continue to report the lowest level of growth but we anticipate this to change over the medium term as there is significant potential in both markets for the development of transport infrastructure.

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 risk. This is a particular concern in El Salvador, Honduras, and Guatemala where high levels of crime, homicide, violence, and insecurity exacerbate...

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Insurance

Panama Insurance

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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...

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Mining

Panama Mining

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BMI View: We expect uneven mining sector growth through 2018 across various countries within Ce ntral America and the Caribbean. The region has significant untapped mineral potential, though variations among countries' business environments and operational challenges will mean varied performance . Overall, we expect Colombia and Panama to see the strongest mining sector growth, while Guatemala, and to a lesser extent Honduras, underperform.

We expect Colombia and Panama to lead the region in terms of mining sector development, with the Dominican Republic not far behind. The former two lead in their overall business environments and mining sector regulatory framework, which should enable consistent investment and sector development...

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Pharmaceuticals & Healthcare

Panama Pharmaceuticals & Healthcare

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BMI View: Costa Rica and Panama will continue to outperfor m other Central American countries, namely El Salvador, Guatemala, Honduras, Nicaragua and Belize . The business-friendly environment, high per-capita medicine spending and strong consumer demand still present strong revenue-generating opportunities for multimodal pharmaceutical companies.

Headline Expenditure Projections

  • Pharmaceuticals: USD3.5bn in 2013 to USD3.7bn in 2014; +4.1%. Our forecast has been revised slightly down since Q314 due to less promising industry data.

  • Healthcare:...

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Telecommunications

Panama Telecommunications

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BMI View: Rise of number porting services and high penetration rates across Central America show that the local population is embracing the competition and keen to switch for a better deal. BMI believes that due to the strong competition it will be more difficult for new entrants, such as Xinewei , to penetrate the market as they would have to undercut the local providers. Mobile forecasts show much slower growth across the board, with only Nicaragua offering any real growth potential. Thus companies are investing heavily into 3G and 4G networks to boost mobile data use. The future for telecoms operators lies in the expansion of content and encouraging consumers to use their mobile connections for a growing range of lifestyle needs. Regional market leader Tigo has been most...

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Water

Panama Water

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BMI View: The Panamanian government is dedicated to improving the quality of its hydrological resources and its water supply and sanitation services, as well as promoting wider access   to   services. The country continues to prioritise and incentivise private investment at national and international levels. We believe these conditions present attractive potential opportunities for investment, although are often hindered by a messy bureaucracy and rampant corruption.

Little has changed in the Panama water sector over H114 and our forecasts have seen little fluctuation. However, we take a more positive view for the future of the sector...

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