Rising geopolitical tensions in the Middle East are feeding through into global macroeconomic expectations, with the International Monetary Fund (IMF) warning of a broad-based slowdown and renewed inflation pressures that are already shaping Panama’s near-term outlook.

The IMF projects world growth easing to 3.1% in 2026 and 3.2% in 2027, while cautioning that inflation could remain sticky in the short term. Although it does not publish a specific forecast for Panama, it places the country within the group of emerging and developing economies most exposed to weaker trade, financial volatility and imported price shocks.

Reflecting this backdrop, the World Bank has trimmed Panama’s 2026 growth outlook to 3.9%, down from 4.1% earlier this year, underscoring the economy’s sensitivity to external conditions, particularly energy prices and global demand linked to shipping and logistics flows.

Economists in Panama argue the external shock comes at a delicate moment. Yariela Zeballos, president of the national association of economists, said recent expansion figures are better interpreted as post-pandemic normalisation rather than sustained development, adding that maintaining growth near 4% would already be a strong outcome under current conditions.

Analyst Roger Durán warned that the duration of the Middle East conflict will be decisive. He noted that a prolonged disruption could shave around 1% off global growth, with Panama feeling the impact primarily through higher fuel costs and reduced household liquidity, as imported inflation filters through transport and logistics.

Fiscal policy is also under pressure. Felipe Chapman, Panama’s finance minister, said volatility in global markets has complicated budget planning, but ruled out near-term subsidy cuts due to inflationary risks linked to rising fuel prices. He stressed the need for greater budget flexibility to absorb external shocks without destabilising public finances.

Strategists, however, see opportunity alongside risk. Eddie Tapiero argued the global shift from efficiency to resilience could benefit Panama if it strengthens its logistics hub, ports and agricultural base. He said targeted spending, including temporary subsidies, may be justified to protect productive capacity during the transition.

Energy markets remain a near-term pressure point. Domestic fuel prices are set to stay elevated in the latest adjustment taking effect from April 17, according to the National Energy Secretariat, even as recent sessions showed some moderation in upward momentum rather than an outright reversal.