Macroeconomic Forecast Panama

Consumer price inflation in urban areas fell to 28-month low of 2.5% y-o-y in May. On a month-on-month basis, the index fell for the first time in four months, to the tune of 0.3% - a sign, in our view, that deflationary forces brought on by the global recession are starting to take root. While we are concerned about the possible feed-through effects of higher oil prices in Q209, and a possible bounce in economic activity by the end of the year, we are sticking to our end-2009 CPI forecast of 4.0% for now.

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