Macroeconomic Forecast Panama

Following Peru and Brazil's recent sovereign upgrades into investment grade class, we are now turning our attention to the next in line. The two credits that stand out are Colombia and Panama. Looking at a host of different macroeconomic variables, it is clear that the fundamental position of both has improved markedly over the past few years. Colombia's external debt-to GDP ratio has fallen from 47.9% in 2002 to an estimated 30.0% last year, while Panama has trimmed its external liabilities from 68.4% to 48.1% over the same period. On balance, we give Panama the slight edge at present. Firstly, the imposition of capital controls in Colombia could stall the sovereign's progress towards investment grade. Secondly, Panama potential free trade deal with the US is likely to face fewer hiccups than Colombia's.

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