Panama’s middle class has grown maybe 50% in size over the last several years thanks to a robust economy and with it government investment in infrastructure improvements.  Everyone wants to know if it will last.  Well, for the next five years it should and hopefully many years after that.  In other areas of Latin America that are expanding but in a commodity driven environment, the situation may be different with the slowing economies in China and abroad.  This in from Market Watch a Wall Street Journal magazine.

BOGOTA, Colombia (MarketWatch) — Andrea Enciso Garcia has found a niche — buying certified organic vegetables and herbs from farms outside Bogota and selling them to the newly created middle class of Colombia.

Andrea, like her clients, is also new to the middle class. She lives in a comfortable two-bedroom home with an expansive view of the Cordillera Oriental, the mountains that surround the capital city.

And her business relies on the stability of the middle class to maintain itself, and its spending habits.

But with China slowing its pace of growth, and Europe in a deepening debt crisis, the stability of the middle class is coming into question in Colombia, and indeed most of the region.

Latin America’s middle class owes part of its emergence to the decadelong surge in commodities. But lately those international markets have begun to cool off. In their place, the domestic economy has begun to shoulder part of the burden of sustaining the middle class. By investing in itself, the middle class has developed a strong retail sector, manufacturing, real estate, telecommunications, health care and more.

The middle class will also need help from government spending. Colombia — along with Peru, Chile and Brazil — have built up coffers from the commodities boom. Colombia’s economy grew at a pace of 5.9% in 2011.

“The North (countries in the northern hemisphere) will not perform well over the next 10 years,” Colombian Finance Minister Juan Carlos Echeverry told me in an interview. Flexibility, he said, will be essential to economic and trade policies. “The countries that save and invest in long-term growth are countries like China, Singapore, Norway, Chile, Peru and Colombia.”

Although the middle class in Latin America has invested in itself, it has been less ambitious about saving. Historically, the household savings rate across the region has been low, relative to other regions like Asia. That is why the government will need to step in to boost savings.

Colombia is already planning on using the tax revenues and royalties it earned on oil exports to expand housing and build infrastructure. The Colombian government intends to spend $100 billion over the next 10 years on infrastructure and logistics, Echeverry says.

It also wants to build 100,000 houses and give them free to the poor – a bill to do so is awaiting passage in the legislature. Also, the government last week gave approval for 140,000 low-interest mortgage loans to finance housing for the lower-middle class.

The government has been less than successful at rebuilding infrastructure. The few contracts it has approved so far have been mired in controversy. Highways and railroads are still needed to bring goods to and from seaports and airports.

If those contracts are granted, and if the work can be carried out, then the jobs and revenue the middle class needs could follow. Consequently, it could also mean investing opportunities for investors in construction, infrastructure, and housing.

Companies like Cementos Argos CO:CEMARGOS +4.46% , which spun off its investment arm as Inversiones Argos last week, and InterconexionEletrica CO:ISA -0.73% could do well if the government’s plan is carried out.

Similarly, it could benefit the agriculture industry so that its goods reach the growing middle class. And it could also mean help for Andrea Enciso Garcia’s organic vegetable business, which depends on the growth and stability of the middle class.

Michael Molinski is the author of “Investing in Latin America: Best Stocks, Best Funds” and is a founding partner of Investing Across Borders, a San Francisco-based research firm (www.investingacrossborders.com)

Michael Molinski is the author of “Investing in Latin America: Best Stocks, Best Funds” and is a founding partner of Investing Across Borders, a San Francisco-based research firm (www.investingacrossborders.com)