Acting like an invisible barrier, inflation prevents benefits of the growth revealed by macroeconomic indicators from reaching the general population.
Translation, when you are growing at an enormous rate, something has to give. Prices will rise here in Panama and it affects the general public especially those living close to the edge.
Panama‘s economy has been growing at an average of 8.9% since 2006, reaching a spectacular 10.5% in 2011. Beyond the pros and cons that the near future affords, this growth may be a little slower, but would only stop with great difficulty.
But as rates have increased each year indicating the country’s growth, so has the scourge of successful economies: inflation. Jose Abbo, vice president of corporate finance at CFS Investment, noted in his article in Martesfinanciero.com that “During the decade of the 1990’s average inflation in our country was just approaching 1%. But from 2005 to date, the average is closer to 5% and the close of 2011 estimates of the highest rate were between 6.5% and 7.0%. ”
Abbo concludes that: “A reality that we face in 2012 is that as long as there is strong economic growth, we are most vulnerable to harmful effects of inflation.”
Source: martesfinanciero.com
I reject the above thesis.
How about the effects of a dollar that is continuously losing value due to the US printing money because of it’s debt situation and poor fiscal management? The Balboa is linked to the dollar. It is time for Panama to split the balboa from the dollar before it enters an abyss. The US debt is NOT sustainable and can only be removed through hyper inflation. The US government issues inflation numbers that leave out food and fuel prices. I would bet that if the true inflation numbers were published, they would be the same as Panama.