The crisis hit Panama’s economy hard. In 2020, gross domestic product (GDP) contracted by almost 18% annually, due especially to the disruption in global trade and tourism. The poorest in society are the most affected. After years of improvement, in 2020, the poverty rate reached 17.8% based on latest international comparable estimations, an increase of more than three percentage points, compared to a year earlier. This figure is lower than in the Latin America and the Caribbean (LAC) region (30.9%). Extreme poverty was stable in 2020 at 6.4%, compared to a LAC average of 10.0%. Similarly to other LAC countries, the pandemic hit Panama’s health sector hard. Before the crisis, Panama’s public expenditures on health stood at 7.3% of GDP, slightly higher than the LAC average (6.8%). They have remained stable in the last decade, compared to an increase of 0.3 percentage points in LAC. Nonetheless, people’s perceptions of the quality of health care deteriorated. In 2020, 50.8% of people declared being satisfied with health care, higher than the LAC average (48.2%) but considerably lower than the average across the Organisation for Economic Co-operation and Development (OECD) (70.7%). This proportion is almost 18 percentage points lower than ten years earlier. The pandemic had a harsh effect on education as well. Between March 2020 and May 2021, schools were fully closed for 55 weeks, one of the highest figures in LAC (26 weeks) and much higher than in the OECD (15 weeks). Effective online learning did not help much in cushioning the drawbacks for students, as it was available in only 23.9% of schools, compared to 32.5% in LAC and 54.1% in the OECD. Concerning perceptions of government transparency, 86.6% of Panamanians thought that the government was corrupt in 2020, considerably higher than in LAC (72.4%) and the OECD (58.8%).

Faced with the COVID-19 crisis, Panama’s priority has been the protection of the most vulnerable households, workers and enterprises. The government’s interventions were mostly focused on job-retention/creation schemes to protect workers’ livelihoods. Regarding households, Panama launched a cash transfer initiative (Panamá Solidario) to distribute funds and resources to those most affected by the pandemic. Regarding workers and enterprises, Panama established programmes dedicated to new credit lines, loans and guarantees for micro, small and medium-sized enterprises and the most affected economic sectors, such as agriculture and hospitality, including tourism, to promote their economic activity and job creation. Additionally, Panama started the Plan Recuperando Mi Barrio programme to generate temporary employment through investments in local infrastructure projects.

Going forward, Panama introduced an economic recovery plan that prioritises the preservation of jobs and the generation of new employment opportunities. In the long term, the government aims to tackle poverty and vulnerability, structural challenges that have been exacerbated by the crisis. Using quality public expenditure as a catalyst for economic recovery, Panama aims to address long-standing needs in public infrastructure. Some projects that stand out are those concerning education, transport and public service infrastructure. These quality investments are intended to create jobs, boost productivity and reinforce supply chains. Likewise, the attraction of foreign direct investment and the implementation of reforms to improve competitiveness and productivity remain central pillars of the recovery plan.

Panama’s international co-operation projects within and beyond the region were focused on both immediate and medium-term challenges arising from the COVID-19 pandemic. Concerning co-operation within LAC, Panama collaborated with the Pan American Health Organisation in the distribution of more than 35 tons of supplies, medicines and protective equipment to fight against the pandemic in 26 LAC countries through the Regional Distribution Centre for Humanitarian Health Aid. Regarding co-operation beyond LAC, within the EUROsociAL+ co-operation programme with the European Union, assistance has been provided to ensure the bio-psycho-social well-being of the elderly population. In addition, Panama has co-operated with the United Nations on projects regarding education post-COVID-19, the proper disposal of COVID-19-related biohazards, and the development of a study codifying good practices in managing prison systems during the pandemic.


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