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Country Profiles

Financial Outlook

According to an IMF country report of March 2013, Panama has the fastest-growing economy in Latin America, with an average annual growth rate of 8.5%. The country’s per capita GDP has more than doubled over the past decade, driven by steady growth in public and private investment and encouraged by a stable economic environment with prudent fiscal policies. Real GDP growth hit 10.7% in 2012, with gross public debt falling from 66.2% to 39.2%. GDP growth in 2013 is estimated to have fallen back slightly to 9.0%. The country’s government debt is now rated as investment grade and ranks on a par with Brazil’s, Mexico’s, and Peru’s. The banking system’s diversified ownership structure, low reliance on wholesale funding, and high capital and liquidity ratios have given the country’s financial sector a considerable degree of resilience. Inflation fell from 6.8% in 2008 to 4.8% in 2013. Because GDP growth has been boosted by unusually high public sector spending, the IMF expects growth to return over the medium term to a more sustainable 6.0–6.5%.

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Further reading on Panama

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