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Monday, August 26 2019 @ 12:32 am EDT

Panama's 1Q Gross Domestic Product Expanded 4.9% On Year

Money MattersThe Panamanian economy expanded 4.9% in the first quarter of this year, compared with the same period a year ago, led by transportation, which includes telecoms and port activities, and tourism, the Statistics and Census Office said Tuesday in a report published on its website. "The economy recovered very well from world economic crisis," Economy and Finance Minister Alberto Vallarino said in a statement. "These results are above the ministry's estimates and well above the forecasts included in the budget in September of last year." He said the growth is the result of the work done over the last few years. The good shape of the country's economy convinced the three major rating agencies to upgrade Panama's debt ratings to investment grade over the past couple of months. The transportation industry in Panama expanded 10% in the first quarter, while hotels and restaurants grew 6.9% as the number of tourists visiting the country rose 5.2%. The Panama Canal suffered from decreased transportation of goods as the number of tons shipped through the canal fell 2.2%. However, revenues from the canal rose 3.1%. The Panamanian economy had expanded 2.4% in 2009, down from 9.2% in 2008.

Editor's Comment: The Panamanian economy continues to grow at a steady clip. When discussing the economy recently and talking about the expansion of the Panama Canal, once that's done in 2014 annual revenue from the Panama Canal will increase to about $5 billion dollars per year, and profits will increase to about $2 billion. Meaning, it will cost about $3 billion each year to operate and maintain the Panama Canal. The rest of the money goes straight into government coffers. Panama currently is carrying about $11 billion in national debt and eventually the country could end up debt free. The thing to remember is this - the $5 billion dollars the Panama Canal will take in every year comes into the country fresh from overseas. It has the same impact as Foreign Direct Investment capital - it's like "new money" being injected directly into the economy. And, the $3 billion dollars that it will cost to operate and maintain the Panama Canal after the expansion is completed, all of that money stays in Panama and is spent on things like services, materials, logistics, communications, fuel, salaries and payroll, contracting, etc. It takes one "pass" through the hands of the ACP but ends up right here in the local economy anyway. In a very short time Panamanians will be - by far - the richest people in Latin America in terms of GDP per Capita (PPP). Nothing short of a major natural disaster can keep that from happening.

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Panama's 1Q Gross Domestic Product Expanded 4.9% On Year | 2 comments | Create New Account
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Panama\'s 1Q Gross Domestic Product Expanded 4.9% On Year
Authored by: Anonymous on Friday, June 18 2010 @ 10:56 am EDT

Good news for the country, but it is the country that will be the richest, as for the people...panamanians, the majority continue to live in poverty. I will be surprise to see if any of that trickles down.

Panama\'s 1Q Gross Domestic Product Expanded 4.9% On Year
Authored by: Don Winner on Friday, June 18 2010 @ 01:11 pm EDT

Actually, It's Still Great News: There are basic fundamental truths to macro economics. First of all, the standard of living for most Panamanians has greatly improved in the past 23 years that I've been living here. The simple fact of the matter is that the economy continues to improve, grow, and expand at a rate faster than the growth of population. In 2002, just eight years ago, unemployment in Panama stood at 16%. By 2008 unemployment had dropped to about 5.8%, thanks in no small part to the robustly growing economy, the real estate boom, and foreign direct investment. As the economy continues to grow more jobs will be created, at a rate faster than the growth in population. Right now every year the population in Panama grows by about 1.65%, which means the creation of jobs is out pacing sources of new employees, strategically speaking.

Fundamental Market Factors At Work: More jobs and not enough people to fill them means the most highly skilled, best educated, and most experienced workers will earn more money, due to the simple principles of supply and demand. A perfectly bilingual executive secretary might be able to make $800 per month today, but in five years that same person will be able to find a job making $1,200 or more. The actual, tangible growth in real wages will also out pace increases in the cost of living due to inflation, meaning everyone will have more disposable income available for discretionary spending. Meaning, people will be able to spend a little more on the things they "want" because they will have more money to pay for the things they "need."

Less People Below The Poverty Line: Another measure is the number of people currently living below the poverty line. Not too long ago 40% of Panamanians were classified this way, a number which had dropped to 28.6% by 2006 data, a situation which continues to improve. There will always be a huge gap between the very poor and the very rich in Panama, however the improving economy means more and more people are making the move from "poor" or "poverty" to middle class. They do this one at a time, through hard work, education, and personal responsibility. The opportunities will continue to present themselves, and people will continue to take advantage of those opportunities.

"Trickle Down" Actually Does Happen: There are only 3.5 million people in Panama, and many of them are either too young or too old to work. The workforce is an essential element of Panama's economy, which continues to grow at an excellent rate. More money coming in from all sources means that some of that money will, in fact, "trickle down" to the hands of the workers. There are now some 140,000 people working in construction in Panama. Ten years ago that number was about 30,000 people. All of those guys are getting paid. Therefore - "trickle down" in action. People who were not working when the unemployment rate was 16% just eight years ago are now working - more "trickle down" in action. Employers and businessmen complain that the "can't keep" their best employees at work because they tend to move laterally from one company to the next as they build experience and get better and more attractive offers. More "trickle down" in action. You can't walk down the street without finding someone who is doing much better now than they were ten years ago. It's happening, all over the place, right in front of your eyes.