The World Bank forecasts Panama’s economy will grow 4.1 percent in 2026, a rate that significantly outpaces the projected regional average. The international financial institution released its latest global economic outlook this week, highlighting Panama’s resilience amid broader Latin American challenges.
This expansion will be driven primarily by the country’s robust service sectors, including finance, business, and logistics. Panama and neighboring Costa Rica benefit from a heavy reliance on service exports, a segment largely insulated from global tariff tensions and trade disputes. The report also notes that Foreign Direct Investment will continue playing a crucial role in financing the nation’s external gaps.
“Panama, along with Costa Rica, benefits from a significant weight of services exports, a segment expected to remain relatively isolated from tariffs and global trade tensions.” [Translated from Spanish]
For 2027, the World Bank anticipates a similar growth figure of 4.1 percent for Panama. This steady performance contrasts with a more fragile outlook for Latin America and the Caribbean overall.
Regional Growth Faces Persistent Headwinds
The broader region is expected to see only moderate growth of 2.3 percent in 2026, followed by 2.6 percent in 2027. This follows a noticeable slowdown observed in the latter half of 2025. While somewhat favorable financial conditions and high prices for some commodities provide support, the World Bank says economic performance remains constrained.
Limited fiscal space and weak domestic demand in several countries are primary drags. The global environment, marked by persistent commercial uncertainty, adds another layer of complexity. Major economies like Brazil, Mexico, Argentina, Colombia, Chile, and Peru show disparate growth trajectories dictated by internal fiscal, monetary, and political factors.
Risks for the region remain tilted to the downside. The bank’s report lists several key vulnerabilities.
A further tightening of trade barriers or an unexpected global slowdown could hurt exports. A sharp drop in commodity prices would pressure many regional budgets. High levels of public debt and substantial Current Account Deficit figures increase exposure to financial volatility and capital outflows. Climate-related risks also threaten key sectors like agriculture, fishing, and energy.
Artificial Intelligence Presents Potential Upside
Despite these challenges, the World Bank identifies potential positive factors. The adoption of artificial intelligence could boost productivity and spur investment in digital infrastructure. This is especially true for nations with stronger human capital and appropriate regulatory frameworks already in place.
Harnessing such technological advances will be part of a larger necessary shift. The institution underscores that restoring stronger, sustained growth is essential for the region’s future. This growth is key to improving job quality, reducing widespread informality, and building greater economic resilience in the coming years.
For Panama, the immediate path appears more stable. Its dependence on globally connected services, rather than volatile goods exports, provides a buffer. The consistent growth projection underscores its unique position as a hub for finance and logistics in the Americas. The country’s ability to attract foreign investment to cover its external financing needs remains a critical component of this economic narrative.