Panama’s economy is growing about 5%. Why is the mortgage book flat?
Short answer: IMF staff now expect Panama’s economy to grow about 5% in 2026 (3.8% in April) and the World Bank 4.2%, but the bank mortgage balance was flat in August (−0.17%) and foreign direct investment was 1.0% of GDP in 2025. Output is strong; the credit and foreign money that usually turn growth into home purchases have not followed yet.
Strong GDP does not automatically mean rising property demand. This note puts the new IMF and World Bank numbers next to the credit and investment figures a buyer actually depends on, with sources and dates. Nothing here is a forecast or financial advice.
Step 1: what the IMF and the World Bank now say
After a mission from 23 September to 6 October, IMF staff said that activity has surprised on the upside, with growth of about 5% in 2026 supported by transport, logistics, tourism and financial services, and 4% to 5% over the medium term. In April the Fund projected 3.8%. As nexo.la reports, the World Bank raised its 2026 figure to 4.2% (from 3.9% in June) and sees 4.1% for 2027 and 2028, while INEC puts first-half 2026 growth at 5.5%.
The statement is from IMF staff; the Executive Board issues the formal assessment later. It also notes that risks are broadly balanced with high uncertainty, and that growth needs to become more broad-based.
Step 2: what has not followed the growth
Two numbers a property buyer depends on have not moved with GDP. The first is bank credit: in the Superintendencia de Bancos’ August report, the residential mortgage balance was $20,016M, down 0.17% in twelve months (see our Chart of the Week #5 and the mortgage squeeze note). The second is foreign money: according to INEC figures cited by nexo.la, foreign direct investment was $905.1M in 2025, 1.0% of GDP, against $4,043.4M in 2018, and fell 61.5% in the first quarter of 2026.
The IMF links the second to the business climate: a more predictable, transparent, rules-based environment, and a successful exit from the EU list of non-cooperative tax jurisdictions, would strengthen investment flows. On the first, it asks supervisors to stay vigilant on construction, commercial real estate, preferential housing and consumer lending, while describing the banking system as well capitalised, profitable and with contained non-performing loans.
| Source | Measure | Figure | Date |
|---|---|---|---|
| IMF staff mission | GDP growth 2026 | about 5% (April: 3.8%) | 7 Oct 2026 |
| World Bank (via nexo.la) | GDP growth 2026 / 2027 | 4.2% (June: 3.9%) / 4.1% | Oct 2026 |
| INEC (via nexo.la) | GDP, first half 2026 | 5.5% | 2026 |
| IMF Fiscal Monitor (via nexo.la) | Public debt, % of GDP | 56.4% (2026) → 49.6% (2031) | 14 Oct 2026 |
| INEC (via nexo.la) | Foreign direct investment 2025 | $905.1M = 1.0% of GDP | 2025 |
| Superintendencia de Bancos | Residential mortgage balance, 12 months | $20,016M (−0.17%) | Aug 2026 |
| ELEMENTE (via nexo.la) | Business sales indicator | 53%, highest since March | Sep 2026 |
Step 3: the debt path and the rating decision
nexo.la’s reading of the IMF Fiscal Monitor (14 October) shows public debt at 56.4% of GDP in 2026 and 49.6% in 2031, the second consecutive downward revision, while the Latin America and Caribbean average rises to 73.9%. The same analysis calculates that net interest takes about $16 of every $100 the state collects. The IMF statement itself calls debt sustainable with moderate risk of stress if the fiscal path of the Social and Fiscal Responsibility Law is kept (deficit ceiling of 3.5% of GDP in 2026 and a 3% target for 2027).
Panama keeps investment grade with S&P (BBB-) and Moody’s (Baa3, negative outlook) and lost it with Fitch in 2024. In September a Moody’s analyst said the aim was to resolve the outlook before the end of November, as reported by nexo.la. That decision is the clearest near-term trigger for bank funding costs, and therefore for mortgage rates.
Step 4: what business sentiment adds
The monthly ELEMENTE survey, reported by nexo.la, shows its sales indicator at 53% in September, the highest since March, with 66% of the 217 participating firms expecting to sell more over the next year and economic confidence at 8.2 out of 10. It is a voluntary panel whose membership changes each month, so we use it as a mood reading, not a measurement of the economy.
Step 5: what this changes for a buyer
Three practical readings, none of them a prediction. First, the macro picture is better than the sentiment of a year ago, so a buyer does not need to price in a weak economy. Second, strong GDP is not the same as easy financing: if you need a mortgage, the question is still whether you qualify today, and the guarantee scheme the Finance Ministry is preparing with the IDB is worth watching. Third, the rating decision and the foreign-investment trend are the two triggers to follow before assuming that growth will translate into demand for homes.
For resale value, the useful question is who your future buyer is and how they will pay. If financing stays tight, the buyers who can pay cash or qualify under the guarantee schemes set the price.
Related: Chart of the Week #5: Who is borrowing, Why new mortgages are falling, The EU tax-list vote.
Questions about a specific unit? Jacky, from the Brax team, answers on WhatsApp: +507 6776-4203. Brax is paid a commission by developers on new-build units.
Common questions
How fast is Panama’s economy growing in 2026?
IMF staff estimate about 5% for 2026 (3.8% in April), the World Bank 4.2%, and INEC reported 5.5% for the first half. The IMF statement is preliminary until its Executive Board concludes the Article IV consultation.
If the economy is growing 5%, why are mortgages flat?
Bank data show the residential mortgage balance at $20,016M in August 2026, down 0.17% in a year, and new mortgage lending fell in January–August. Growth in output has not yet translated into more bank mortgage credit; the Finance Ministry says many buyers do not qualify as prices rise.
What is the near-term risk to watch in Panama’s economy?
The IMF lists fiscal slippages, social tensions, unresolved legal and arbitration issues around Cobre Panamá and port concessions, and renewed El Niño drought. A rating decision by Moody’s is also expected, with the agency indicating it aims to resolve its outlook before the end of November.
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