According to BNAmericas, although Panama's GDP growth rate has slowed in recent years, it still achieved a growth rate of 2.9% in 2024, indicating that the country has not yet encountered an economic crisis.
However, this growth rate is not enough to reduce the high unemployment rate and informal employment, which have worsened since the indefinite suspension of copper ore production in Panama at the end of 2023.
Eric Molino, an economist and president of the think tank Consejo Interamericano de Comercio y Producción (CICYP), predicts that the "employment crisis" may soon intensify. Chiquita Panamá has halted its banana production and export in Bocas del Toro province and relocated its operations to other countries in the region, such as Costa Rica, the Dominican Republic, and Guatemala, due to labor disputes.
The withdrawal of Chiquita means a direct loss of 7,000 jobs and thousands of indirect jobs.
Under these circumstances, Molino believes that the priority is to resume production at the copper mine. "So this can immediately bring income to everyone, and obviously, it can quickly revive commerce, transportation, and construction, which are the three pillar industries of Panama's economy."
According to estimates by the Panamanian Mining Chamber (Camipa), when Minera Panamá, a subsidiary of First Quantum Minerals, closed the mine a year and a half ago, it resulted in the loss of approximately 54,000 direct and indirect jobs. Initially, the suspension of mine production led to the loss of 40,000 jobs.
"The official unemployment rate was 9.5% in mid-October last year, but with Chiquita's withdrawal, the current unemployment rate has risen to 10.8%. So, this will indeed bring other problems and social instability, because people really need jobs and liquidity, and there are not enough large enterprises that can (like First Quantum Minerals) fill the gap."
This economist said that due to the closure of Panama's copper mine, the annual loss of payments to suppliers, wages, and taxes amounts to $1.6 billion. "You lose about $5 million a day, and you also feel the loss of liquidity."
"In my opinion, an important thing that can be done in the short term is to quickly respond to the mine's concerns. This issue has become somewhat politicized. The focus is not on the technical aspects," Molino said.
Meanwhile, President José Raúl Mulino confirmed that Frank Nevada has suspended its $5 billion arbitration claim against Panama, after the Supreme Court ruled that the mine was unconstitutional.
"This clears the way for negotiations with mining companies to begin at the appropriate time," Mulino said at his regular Thursday press conference. However, he warned that a decision on the mine "will not be made quickly, as it is a very complex issue involving many aspects that we must reconsider and evaluate based on the national interest."
The Panamanian government is facing six or seven international arbitration cases over the closure of the mine, which produced approximately 330,000 mt of copper in 2023. First Quantum Minerals also withdrew its arbitration request to the International Chamber of Commerce over the closure. Franco-Nevada Corporation has an agreement with the mine to purchase gold and copper.
