Despite its status as a high-income country, Panama continues to grapple with significant inequality. The nation has made strides in reducing poverty and closing social gaps, yet challenges remain on the path to a more equitable society.
In October, the International Day for the Eradication of Poverty prompts reflection on how countries can build inclusive societies. A forthcoming World Bank report titled "Panama: From Growth to Prosperity," developed in collaboration with Panama's government entities such as the Ministry of Economy and Finance (MEF) and the National Statistical Office (INEC), examines both achievements and ongoing challenges.
Panama has experienced economic growth surpassing regional averages, leading to a reduction in poverty from half of the population in 1989 to one in ten today. However, inequality persists as a major issue. In comarcas, 76% still live in poverty according to 2023 data. The World Bank report points out that income disparity, fiscal system limitations in wealth redistribution, and vulnerability to climate-related natural disasters contribute significantly to this inequity.
The report outlines a strategy based on three pillars:
1. Closing Territorial and Ethnic Gaps: There is a significant urban-rural divide, with nearly half of comarca households lacking basic services like electricity and potable water. Public investment must focus on these areas while improving access to services and promoting rural economic opportunities.
2. Promoting Human Capital and Productive Jobs: Panama's human capital lags behind similar-income countries. Only 16% of middle school students meet minimum math competencies. Improving education quality and accessibility is crucial for increasing productivity.
3. Strengthening Household Resilience: Panama faces frequent natural disasters like floods affecting up to 18% of the population during severe events. Enhancing disaster response capacity and investing in resilient infrastructure are essential steps forward.
The report emphasizes that addressing income disparities, boosting human capital, and enhancing resilience can lead Panama from mere growth towards shared prosperity—a path towards an equitable society where growth benefits all citizens sustainably.