Citi lifts Panama 2026 GDP forecast to 4.4% on canal rerouting
Citi has raised its 2026 Panama growth forecast to 4.4 percent, outpacing consensus estimates, as Middle Eastern shipping disruptions drive sustained traffic through the canal and bolster demand for its dollarised debt.
Citi has raised its 2026 Panama growth forecast to 4.4 percent from 4.1 percent, making the US bank the most bullish forecaster in the market. The revision contrasts with estimates from the finance ministry, the World Bank and the IMF, which cluster between 3.9 and 4.1 percent.
The upgrade hinges on the Panama Canal. Citi told the Panama City daily La Prensa that carriers are rerouting cargo away from the conflict around the Strait of Hormuz, pushing more traffic through the waterway. First-quarter data supports this thesis: GDP grew 4.8 percent to $22.5 billion, with transport and logistics posting the fastest sectoral expansion as toll income rose more than 5 percent.
For emerging market investors, the call stands out because forecasters typically cut estimates during periods of Middle East tension and slowing global trade. Panama is tracking well above the expected Latin American average of around 2 percent for 2026. This outperformance is demand-led rather than government-driven, with the private sector accounting for more than 80 percent of the country's 4.4 percent expansion in 2025.
The country's dollarised economy eliminates exchange-rate risk for foreign buyers, making it a natural base for regional banks and multinationals. This structural advantage helps sustain healthy demand for Panamanian debt. The government returned to international markets earlier this year while prioritizing deficit reduction to maintain its investment-grade ratings of BBB- from S&P and Baa3 from Moody’s.
Citi, a long-standing lender in the country, noted that investor appetite extends beyond sovereign bonds to the infrastructure pipeline. The government has dedicated over $11 billion of its roughly $35 billion national budget to public works, including metro expansions. Separately, officials have earmarked more than $300 million to support small and medium-sized firms in logistics, construction, trade and tourism.
The bullish thesis carries structural caveats. A dollarised economy cannot deploy monetary stimulus to absorb external shocks. Furthermore, the growth narrative remains heavily tethered to a single waterway whose operational capacity is subject to weather-dependent water levels.
