What Happened
Panama is set to be among the strongest-growing economies in Central America this year, with the Economic Commission for Latin America and the Caribbean projecting gross domestic product growth of 4%. That estimate is slightly higher than the 3.7% forecast issued in December 2025.
The projection places Panama alongside Nicaragua, Guatemala and the Dominican Republic among the region’s top performers. Nicaragua leads the group with expected growth of 4.5%, while Costa Rica is projected at 3.9%, Honduras at 3.8% and El Salvador at 3.3%.
Regional Outlook
Across Latin America and the Caribbean, growth is expected to average 2.2% in 2026, down slightly from the 2.3% forecast made in December 2025. The slowdown reflects global conditions that continue to weigh on investment, trade and prices.
For Central America as a whole, growth is projected at 2.2% this year, compared with 2.3% in 2025. That regional average is dragged down by contractions expected in Cuba and Haiti. Excluding those two economies, the subregion would expand by 3.9% in 2026, slightly above last year’s 3.8%.
Why the Forecast Matters
The outlook suggests Panama remains one of the region’s more resilient economies, even as growth across much of Latin America continues to face pressure from higher uncertainty and weaker external conditions. A 4% expansion would put the country above the regional average and among the best-performing economies in its neighborhood.
The forecast also reflects a broader pattern of moderate regional growth. The commission says 24 of the 33 countries in the region are expected to slow this year, while only seven will accelerate. If the projection holds, Latin America and the Caribbean would complete four consecutive years of growth close to 2.3%, underscoring a long period of limited expansion.
Global Pressures Shaping the Outlook
The economic outlook is being shaped by rising geopolitical tensions and the conflict in the Middle East, which have increased uncertainty in global financial and commodity markets. Oil prices in the first three weeks of April stood far above December 2025 levels, adding pressure to inflation and raising production and transportation costs.
Higher food prices, slower growth among major trading partners such as the eurozone, China and India, and a weaker pace in global trade are also expected to affect the region. The World Trade Organization projects that the volume of goods and services will grow more slowly this year than in 2025.
Within the region, private consumption is expected to lose momentum, banks are likely to remain more cautious and investment is forecast to rise at a more moderate pace. Employment growth is also expected to be subdued, while inflation is projected to move above 3% across the region in 2026.
For Panama, the projection points to continued momentum in a difficult international environment. That performance would reinforce the country’s role as one of Central America’s more dynamic economies, with growth still above the regional average despite global headwinds.