The Economic Commission for Latin America and the Caribbean (ECLAC) has released its 2025 Economic Survey of Latin America and the Caribbean. The report makes one thing clear: unless the region urgently mobilizes resources to finance development, it risks facing yet another “lost decade.”
For Panama, which stands out with one of the region’s higher growth projections — 4.2% in 2025 and 4.6% in 2026 — the message is particularly relevant. Its open economy, logistics hub status, and role as a financial center put it at the heart of the challenges and opportunities outlined in the survey.
A Slowing Global Economy Meets Panama’s Strategic Position
Global GDP growth is expected to slow to 3% in 2025, affecting advanced and emerging economies alike. Trade wars and tariff disputes have strained global commerce, limiting demand for exports from Latin America.
Despite this, Panama is positioned better than most of its neighbors. The country benefits from its diversified economic base — from the Panama Canal and logistics platforms to financial services and tourism. As trade routes shift and global flows become more selective, Panama’s geographic advantage remains central.
Still, external volatility has real effects: higher financing costs, exchange-rate swings, and global protectionism weigh on business confidence and investment.
Fiscal Challenges: Lessons for Panama
The survey highlights that Latin America collects too little in taxes (just 21.3% of GDP on average) compared to OECD countries (34%). In Panama, where tax pressure is among the lowest in the region, this translates into limited fiscal space for public investment.
At the same time, regional governments face rising demands: health and pensions under demographic pressure, climate change requiring up to 5% of GDP in adaptation and mitigation, and persistent social inequality.
For Panama, this creates both a challenge and an opportunity. Expanding fiscal capacity through progressive reforms, combating evasion, and modernizing tax collection could free up resources for infrastructure, education, and climate resilience — all crucial for sustaining its growth model.
Closing the Financing Gap – Panama as a Hub
The region faces a widening SDG financing gap, now estimated at US$ 3–4 trillion annually. ECLAC calls for reforms in global tax cooperation, sovereign debt management, and financial safety nets.
Here, Panama can play a key role. As one of the main financial centers in the Americas, it is positioned to attract green bonds, social impact investments, and foreign direct investment (FDI) aligned with national development priorities. The government’s efforts to expand fintech, digital banking, and capital markets could amplify this role and turn Panama into a hub for sustainable finance in the region.
Development Banks and Infrastructure
ECLAC underscores the critical role of development banks in channeling resources to productive sectors. For Panama, this resonates in areas such as:
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Infrastructure modernization: expanding ports, airports, and logistics hubs.
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MSME financing: increasing credit access for small businesses, the backbone of local employment.
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Sustainable development: clean energy, water security, and climate resilience projects.
With improved governance and regional cooperation, Panama could leverage both international and domestic development finance to scale investments in these sectors.
Panama’s Outlook in 2025–2026
Unlike many countries in the region, Panama’s growth outlook remains positive:
This growth is expected to be driven by logistics, tourism recovery, and continued infrastructure investment. However, risks remain — from global trade disputes to climate shocks like droughts affecting Canal operations.
To sustain momentum, Panama must continue to invest in resilient infrastructure, fiscal modernization, and diversification of its productive base.
Towards an Inclusive and Sustainable Future
The broader message of the 2025 Survey is that resource mobilization is not just about money, but governance, cooperation, and leadership. For Panama, this means leveraging its comparative advantages — connectivity, financial sophistication, and service-driven economy — while addressing vulnerabilities such as inequality, low tax revenues, and climate risks.
If governments, private investors, and international partners align, Panama could emerge as a model of sustainable development in the region — a country that not only grows, but grows inclusively.
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