David Virzi: Economist and Entrepreneur – “We Must be Optimistic and Believe that Panama will do well.”

David Virzi, economist and entrepreneur, fervently believes that tools empower, open doors, and generate real and sustainable employment. He acknowledges this head-on, oblivious to the tricks recently promoted on social media, just as he emphasizes the importance of subsidies that drive progress.  For the businessman, tools are a fundamental part of preserving social peace in the country. In an interview, Virzi talks about subsidies, tools, the situation with strikes, and why we must be optimistic about the future, always trusting that Panama will do well.

When you talk about tools, what are you referring to?

We talk about how there must always be social peace, and social peace is achieved through three pillars: your own home, decent work, and access to basic services (healthcare, education, etc.). If we have these pillars, there will be social peace and we will have a happy country.

What is your position on subsidies?

I’ve been referring to permanent subsidies, not to what are truly tools like scholarships, the 120 grant for those aged 65, and Guardian Angel. If we simply accustom people to giving them things without giving them the opportunity to progress, we fall into a vicious cycle or subsidies that make you dependent. Scholarships, for example, are tools and should be distanced from subsidies that won’t bring you anything. 

At some point are subsidies necessary? 

Initially, a subsidy is needed to progress, but subsidies should be temporary. In other words, the subsidy for Grade C milk is a subsidy given to producers, when in fact, the subsidy should be used to encourage them to migrate to Grade A and thus grow. 

What do you consider to be the most serious damage caused by closures and strikes? 

Economically, it’s not good; it hinders investment or any projects people might want to plan. And if it’s foreign investment, they look to neighboring countries, scaring away investment.

(In Other News) Panama Faces a More Uncertain International Environment

Growth rates are expected to be revised downwards globally. Over the past two years, there has been an economic slowdown, both locally and internationally, in response to higher prices and interest rates resulting from the shock caused by the coronavirus (COVID-19) pandemic. Although there has been moderate year-on-year price growth since the second half of 2022, the level remains high. This year, another variable is exerting uncertainty and significant upward pressure on prices: the reciprocal tariffs announced by US President Donald Trump, and the response of the affected countries. Tariff pressure has been increasing since early March, when the U.S. imposed tariffs of 25% on Mexico and Canada (with the exception of products covered by the Free Trade Agreement) and 10% on China. Subsequently, a 25% tariff on steel and aluminum imports was announced, concluding this round of tariffs with differentiated percentages by country, announced on April 2. Panama will face a 10% rate, one of the lowest within this framework.

Faced with this outlook, described as pessimistic in terms of trade frictions, the Organization for Economic Cooperation and Development (OECD) revised downwards its global growth projection on March 17: From 3.3% to 3.1% for this year and to 3.0% for 2026. In the case of the United States, the OECD adjusted its forecast to 2.2% in 2025 and 1.6% for 2026, from previous estimates of 2.4% and 2.1%. Although Panama’s performance was expected to be more favorable than other countries in the region before the tariffs were announced—with forecasts pointing to 4.0% growth—according to international media, the impact and scope of these measures on the country’s economy are currently unknown. Given their widespread nature, growth rates are expected to be revised downward globally. However, some local analysts have highlighted that the imposition of tariffs by the U.S. could be used to attract foreign companies and expand operations in Free Trade Zones , especially those related to e-commerce.

Inflation

In 2024, the Consumer Price Index (CPI) in Panama registered a negative year-over-year change of 0.2%. This decrease is mainly explained by the decrease in the rates of six of the 12 groups that make up the basic consumer basket. Among these, the transportation group stands out, representing 17% of the index and registering a year-over-year drop of 0.6%. On the other hand, the food and non-alcoholic beverages group, which represents 22% of the consumer basket, only registered a year-over-year increase of 0.1%. At the end of February 2025, cumulative inflation was -0.1%. However, a reversal of this trend is anticipated due to the inflationary effect that new tariffs on imported products could generate. Globally, these tariffs are expected to raise prices, at least temporarily, and the US Federal Reserve (FED) has already warned of the risk that these increases will persistently pass through to core inflation.

Interest Rates

Following the US announcement of tariffs on “Liberation Day,” markets reacted strongly.  Global stock markets fell between 3% and 6%, the yield on the 10-year U.S. Treasury bond declined, and the dollar weakened, contrary to what would traditionally be expected in the face of protectionist measures. Initially, markets raised expectations for rate cuts from the Fed (a 100 basis point cut in 2025). However, Fed Chairman Jerome Powell clarified on April 4 that the Fed would not act hastily, prioritizing stable inflation expectations. Although future cuts are not ruled out, they will depend on clear signs of an economic slowdown.

Reform of the CSS

On the domestic front, Panama approved a pension reform that did not include an increase in the retirement age. Instead, it committed to state contributions of $966 million annually, adjustable up to 4% per year, to finance the Disability, Old Age, and Death (IVM) program of the Social Security Fund (CSS). It also committed to additional contributions to the Sickness and Maternity program of $25 million and $20.5 million annually to help the CSS cope with fluctuations in bonds and securities that might be affected. This decision, while providing short-term relief, could also increase pressure on public finances and fiscal sustainability in the long term.

Conclusion

The current international environment, marked by a resurgence of trade protectionism, poses significant challenges for open economies like Panama. However, there are also strategic opportunities to reposition the country as a regional logistics and manufacturing destination. The key will be to maintain a long-term vision, promote productive investment, and strengthen macroeconomic resilience in the face of a more volatile and uncertain international environment.

15 Mind-Blowing Facts About Panama