Forbes Notes Panama's Prosperity
Thursday, December 18 2008 @ 08:44 PM UTC
Contributed by: Don Winner
A second major factor is the Panama Canal widening construction project that is boosting the nation's economy, the largest infrastructure project in Latin America with a tentative tag price of $5.2 billion. Already underway, the project is pumping money into the local service-based economy, which should easily reach the 7-8% growth in 2009 according to International Monetary Fund projections.
The third important reason for prosperity is the massive income generated by the Colon Free Zone, (second in size only to Hong Kong), representing almost 8% of the Panama economy.
Last year, bilateral trade between the U.S. and Panama totaled $4.1 billion, up by nearly one billion over 2006. One third of Panama's imports come from the United States, and 36% of its total exports are bound for the United States.
Panama's economy grew by 9.2% in the 3rd quarter over the year ago period, helped by expansion of agriculture, manufacturing and services, the government reported Monday. Between July and September GDP grew to $4.73 billion, up $400 million from the same period in 2007.
Panama's economy is expected to grow 9.5% in 2008 and at least 7.5% in 2009, as the impact of the consumer slowdown in the United States begins to hit global trade. Transport, including shipping through the country's famous canal, accounts for about a fifth of Panama's gross domestic product.
According to the government, other growth sectors continue to flourish including the construction sector, which has transformed Panama City's skyline into a mass of skyscrapers. In the third quarter, the construction sector grew 28.8% over a year ago, accounting for just over 5% of GDP, but a sign of slowing was shown in a 30% construction decline in September compared to a year ago.
Panama has posted 23 consecutive quarters of economic growth, growing gross domestic product by 11.5% in 2007, which is double the pace of the rest of Latin America and well ahead of the United States. These numbers rival powerhouse China in terms of national GDP growth.
But one veteran local observer urges caution: "I am amazed that they can state that even though the condo bubble appears to be bursting, Panama is doing 'brilliantly'. When stories like that come out you can be sure things are not as rosy as they would like you to think."
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