2025 was a year of transition that ended a period of over 12 years of labor precariousness and state intervention, facilitated by a 'toxic' addiction to debt. This led to the loss of Panama's investment grade from Fitch Ratings in March 2024, a dramatic contraction in consumption in the first half of 2025, and the outflow of $361 million in Foreign Direct Investment (FDI) in the first half of the year, revealed to La Verdad Panamá by René Quevedo, an engineer and consultant on labor issues.
The dramatic nature of the scenario was recorded in the last two years (2023-2025), when, according to the specialist, Panama lost 80% of its exports and 70,000 jobs, 54,000 from the mine closure and another 15-20,000 from the 'labor massacre in Bocas del Toro.' This has led us to an unemployment rate of around 10.4-10.5%, the highest in the last 20 years, excluding the pandemic and post-pandemic years (2020, 2021).
The economy experienced a strong contraction in consumption in the first half of 2025, induced by the massive loss of formal employment in 2024, derived from the mine closure and the loss of the investment grade from Fitch Ratings in March 2024. ITBMS tax collections fell 11% vs 2024, indicative of a reduction of $128 million in monthly consumption nationwide, whose 'epicenter' was in Panama and Panama West, which between August 2023 and October 2024 lost more than 125,000 jobs and $60 million in monthly payroll mass, according to figures from INEC (47% of the consumption contraction nationwide).
Quevedo points out that in the second half of 2025, a gradual process of recovery of confidence began, which has translated into an increase in both private investment and consumption. The severe contraction in consumption recorded in the first half of the year has been overcome, following the massive loss of formal employment in 2024, particularly in Panama and Panama West. Between January and November 2025, bank financing to the productive sector increased by 9% versus the previous year, and monthly consumption between July and October 2025 increased by about $133 million monthly compared to the second quarter of the year.
Panama's sovereign debt country risk premium fell considerably in the second half, and Panama's sovereign bonds experienced a notable rebound in international markets, indicative of an improvement in the attractiveness for Foreign Direct Investment (FDI) after the mining fiasco and the debacle with Chiquita Panama.
This trend in the second half of 2025 towards confidence, increased consumption, and greater private investment will continue in 2026, and the sectors of commerce, construction, administrative support activities, hotels, restaurants, and industry will be the main beneficiaries of the higher levels of private investment in the economy associated with the government's planned infrastructure projects, the reactivation of private construction, and the imminent reopening of the Donoso mine towards mid-year, Quevedo emphasized.
Entry
2026 must be a year of recovery that allows us to reduce the unemployment rate that dangerously stands at 10.5%.
