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In July 2019, new President Laurentino Cortizo took office vowing to re-energize the economy, curb corruption, and reduce poverty in a nation that has witnessed some of the highest development rates and unequal income distribution in Central America.

Leading the Democratic Revolution Party, Cortizo said he would focus his five-year term on balancing foreign relations with both China and the US. The two nations are the largest users of the Panama Canal, a vital revenue source for the nation since it claimed full sovereignty over the pan-oceanic transit hub in 1999.

Spearheading economic reforms is Finance Minister Héctor Alexander, a former student of Nobel Laureate economist Milton Friedman at the University of Chicago. Alexander has long held bearish views of Panama’s markets, projecting the economy will grow slightly less than 4% in 2019, below International Monetary Fund (IMF) estimates.

In assuming his new role, Alexander said he would implement a slew of new measures to improve the economic forecast for one of the region’s fastest-growing nations. “We are falling short of where we could be in growth and development, and this is our big challenge,” he told Bloomberg News. “We think we can turn it around.”

Panama’s growth has long been lauded for China-like growth rates that have given rise to countless new skyscrapers in the capital city over the last decade. While Alexander believes the nation could be more prosperous, many analysts have pointed to healthy growth in the nation’s industrial sector, as well as sustained development of small to medium business enterprises as signs the stubborn unemployment rate will shrink in the foreseeable future.

Apart from a booming finance sector, which is expected to grow 10% in 2019, Panama maintains one of the highest levels of FDI in the world. Such figures have led the IMF to project the economy will reach a growth rate of 6.3% in 2019, well above its 4.6% rate in 2018.

The Centre for Economics and Business Research of the United Kingdom projects even higher growth rates, estimating 6.8% for the year, citing strong construction activity stemming from large infrastructure projects, including a fourth Panama Canal bridge, extensions of the Panama City metro line, and upgrades to metropolitan sewage and transportation systems.
“We are going to be better off with Cortizo,” Ana Lorena Carrizo, a risk analyst at ratings firm Equilibrium, said. “He has a plan to boost the agricultural, healthcare, and tourism industries, as well as exports.”

One of the main drivers for Panama’s industrial revival will come from its first copper mine, which opened in spring of 2019. Operated by First Quantum, a Canadian mining company, the mine is expected to generate USD2 billion per year in export revenue once it is fully operational in 2021. Known as the Cobre Panama mine, it is the largest copper mine coming online in the next few years and represents the single-biggest private sector investment in Panama’s history. The USD6.4-billion operation produced its first copper at the end of March 2019 and is expected to produce between 140,000 and 175,000 tons of copper by December. By 2020, production is projected to rise to 270,000-300,000 tons.

First Quantum invested USD1.83 billion in the last two years to bring the mine to market, and developments are ongoing as transportation and industrial facilities are expanded to support the project. Such large-scale projects, along with the transparent, pro-business policies set forth by the new administration, are likely to spark new energy in the Panamanian economy that might just surprise its own finance minister.