Panama is set to remain one of Latin America’s economic standouts, with the World Bank projecting GDP growth above 4% through 2028 — nearly double the average expected for the rest of the region, according to a new report on Latin America and the Caribbean.
What Happened
The World Bank report projects that Panama’s economy will grow by 4.2% in 2026, followed by 4.1% growth in both 2027 and 2028. The country closed 2025 with growth of 4.4%, the report notes.
Those figures place Panama well ahead of the regional average, which the World Bank puts at 2.2% for the rest of Latin America and the Caribbean.
The report attributes Panama’s performance to its place among nations that have backed their economic dynamism with lasting policy decisions grounded in sound macroeconomic fundamentals. According to the World Bank, countries that have adopted solid, durable policy decisions are achieving better results: higher growth, more investment, and greater market confidence.
The projections come as fresh data from Panama’s National Institute of Statistics and Census shows the economy expanded by 5.5% in GDP during the first half of 2026, driven by increased activity in trade, the Panama Canal, the logistics sector, and certain export activities.
Background
Panama has long been one of the fastest-growing economies in the Western Hemisphere, with its dollarized economy, the Panama Canal, the Colón Free Trade Zone, and a services-driven model centered on banking, logistics, and commerce. Canal traffic and logistics activity are closely watched indicators of the country’s economic health.
While Panama outpaces its neighbors, the World Bank report also highlights persistent structural challenges across the region that apply to Panama: widespread labor informality, human capital deficits, and climate vulnerabilities such as the El Niño weather phenomenon. These factors, the report notes, continue to hinder poverty reduction and limit private demand.
The report also emphasizes the potential of artificial intelligence for the economic development of countries in the region, pointing to specific, simple, and low-cost tools that can solve concrete local problems.
What This Means for Panama
The World Bank’s forecast reinforces Panama’s position as a regional growth leader at a time when much of Latin America is expanding at roughly half Panama’s pace. Sustained growth above 4% could support continued investment inflows and market confidence, two factors the bank explicitly links to sound, long-term policy decisions.
The strong first-half 2026 figure of 5.5% growth, driven by the Canal, trade, and logistics, suggests the drivers of the projection are already delivering. At the same time, the report’s warnings about labor informality, gaps in human capital, and climate vulnerability such as El Niño signal the areas policymakers will need to address to ensure growth translates into broad-based poverty reduction and stronger private consumption.
Observers will be watching whether Panama can maintain momentum through 2027 and 2028, and whether emerging tools such as artificial intelligence begin to play a role in addressing the country’s developmental challenges.
This story was originally reported by La Prensa.