What Happened
Bank of America says Panama’s economic outlook remains favorable, pointing to stronger Canal revenues, improving fiscal indicators and the growing possibility of renewed activity at Cobre Panamá in Donoso. The analysis says the country has been able to absorb the shock from the war involving Iran partly because the Panama Canal is benefiting from diverted trade flows.
According to the assessment, the Canal is seeing higher demand for vessel traffic as oil prices rise and shipping routes face interruptions. In that environment, longer alternative routes become less attractive, while higher fuel and insurance costs also support traffic through the interoceanic waterway.
The Canal reported year-on-year revenue growth of 10%, topping $3 billion in the first six months of fiscal 2026. Average daily transits rose 4% year-on-year, with traffic increasing from 34 vessels per day before the conflict with Iran to about 40 or 41 per day now.
Why the Canal Matters Now
Bank of America describes the current conditions as especially favorable for the Canal because major Asian buyers such as Japan, South Korea and China rely heavily on fuel imports from the Middle East. As more of that commerce is redirected through Panama, the Canal is capturing additional traffic and income.
The firm also links the stronger Canal performance to the government’s fiscal position. It says Panama is likely to meet its fiscal rule target this year, helped by the Canal’s resilience and a broader improvement in public finances. The analysis projects that Canal revenues could rise by about $2.5 billion over the next seven to eight years, with the government dividend increasing by roughly half that amount.
Current Canal revenues are around $6 billion, and Bank of America says organic growth alone could lift that figure to $7.5 billion over the next seven or eight years. With four planned projects, revenue could reach $10 billion, according to the assessment.
Mining and Investment Outlook
The analysis also places renewed attention on Cobre Panamá in Donoso. It says there is a greater chance that the mine could resume operations within six to twelve months, and notes that the activity represents close to 3% of GDP while also generating broader indirect benefits for the economy.
Among the signals cited are government moves such as authorizing the processing and sale of stored mineral material. Bank of America says social opposition to mining appears weaker than it was in 2023, which it sees as part of the case for a gradual return of activity.
On the broader investment outlook, the firm says Panama continues to look favorable in international markets and is being viewed as a country with investment-grade characteristics. It maintains a Marketweight recommendation on Panamanian external debt and says Moody’s could preserve the country’s investment-grade rating.
Growth and Fiscal Trends
Bank of America projects Panama’s economy will grow 3.8% in 2026, after an estimated 4.4% expansion in 2025. The firm says the fiscal adjustment has been substantial, citing a drop in the nonfinancial public sector deficit from 6.2% of GDP in 2024 to 3.7% in 2025, which would meet the fiscal rule target. The deficit fell further to 3.5% of GDP in the first quarter of 2026.
The assessment says stronger Canal income could help sustain that consolidation path even if fuel subsidies increase. For Panama, the combination of higher transit income, possible mining progress and improving fiscal performance is shaping a more positive economic narrative heading into 2026.