(Adds comparative figures)
PANAMA CITY, May 26 (Reuters) - Panama's economy grew in March at its slowest pace in three years after a spat over the expansion of the Panama Canal and an end to some public works projects dragged on the pace of construction, quarry output and mining.
Panama's economy grew 4.17 percent in March compared to the same period a year earlier, the government said on Monday, just below the 4.31 percent pace in February and the slowest pace since March 2011.
February's growth was stunted by a decrease in construction and mining activity following a dispute over the multibillion-dollar expansion of the canal, and the conclusion of other state funded projects, which reduced demand for building materials such as cement.
The expanded waterway, which connects the Atlantic and Pacific Oceans was originally due to open this year, but disagreements over funding and delays have pushed that back.
Panama, with a population of around 3.7 million, escaped the worst of the global recession, expanding at an average rate of 8.5 percent over the past five years.
The International Monetary Fund has forecast that Panama will be the fastest-growing economy in Latin America this year. (Reporting by Eli Moreno and Alexandra Alper; editing by G Crosse)