The results of the Panamanian economy in 2016 are mostly characterized by the increase of the slowing down process. Clearly, this has led to a significant deterioration to the labor market.

While in the third quarter of 2014, the GDP’s accumulated annual growth rate was 6.1%, in 2015 it declined to 5.8% and in 2016 it reached 4.9%.

This trend led the Ministry of Economy and Finances to reduce its closure expectations for 2016, settling for 5.2%. Quite an exaggerated rate that could only be achieved if the GDP of the 4^th quarter showed an annual growth rate of 5.7%.

For the Economic Commission for Latin America and the Caribbean, the Panamanian economy will close 2016 with a 5.2% growth. A reduction of over half percentage point when compared to the 2015 results.

What is the impact of this situation on the labor market? The unemployment rate went from 4.8% in 2014 to 5.1% in 2015, to 5.5% in 2016.

From August 2015 to August 2016, the private sector employment suffered a reduction of 15,066 people. This situation, which could not be balanced with the increase of the number of employees in the public sector, nor with the growth of the working population, led to a rise of the informality rate from 39.9% to 40.2%.

These trends are the direct consequences of three basic factors:

• The deteriorated international context that has a negative effect on several components of the service exportation platform, such as the Columbus Free Trade Zone, the Panama Channel, the port activity and tourism.
• The lack of care the current government has have with the agricultural and industrial sector, which are both going through an economic slowdown.
• The decrease in the dynamics of the construction sector, caused by the saturation of the non-residential area, the difficulties in the residential area, and the lack of management capacity for public works.

According to local specialist, these problems will not go away in the short term.