Here is a Bloomberg article reporting on the prospects for Panama’s future which will remain bright.
Panama’s economy will grow as much as 7 percent annually for the next five years as an expanded Panama Canal lures companies interested in servicing trade between Asia, the U.S. and Europe, incoming Economy and Finance Minister Dulcidio de la Guardia said.
“The canal is like a road and we’re currently adding a third lane to it that is wider and which will allow Panama to further position itself as a logistics hub servicing new trade routes,” De la Guardia, who takes office tomorrow with President-elect Juan Carlos Varela, said in a phone interview today. “Panama will be growing by 6 to 7 percent every year, at least, in the next five years.”
Fueled by the $5.25 billion expansion of the canal, Panama’s $36 billion economy has been Latin America’s fastest-growing, with gross domestic product surging an average of more than 7 percent a year under departing President Ricardo Martinelli. Mining, tourism and financial services will be the main drivers of the economy in the future while logistics companies will see a rise in demand once the first ship transits the new set of locks in early 2016, De la Guardia said.
Varela, who had been vice president under Martinelli, upended pre-election polls in winning the May 4 vote after a falling out with the ruling party. With Panamanians saying inflation was their top concern, Varela vowed to fight inequality and impose price controls on basic goods including rice, meat and cheese. A proposal on the new measures will be sent to Congress within a month, De la Guardia said.
‘Spending Control’
While consumer prices rose 3.2 percent in May from a year earlier, food prices are climbing about 7 percent annually, he said.
Bordered by Costa Rica and Colombia, Panama’s GDP (PNGDYOY%) expanded 5.8 percent in the first quarter from a year earlier, the slowest pace in about four years. Annual growth of 6 percent per year by 2015, down from a peak of over 10 percent in 2011-2012, will require “improved spending control,” Fitch Ratings said in a report last month. Public spending accounted for a record 10 percent of GDP last year, Fitch said.
The country of 3.6 million people is rated BBB by Standard & Poor’s, placing it in the same category as Spain and the Philippines.
De la Guardia, 50, who holds a master’s degree in business administration from Loyola University in New Orleans, said his top priority will be fiscal consolidation. The country’s fiscal rule forces the government to cut spending to end the year with a budget deficit no greater than 2.7 percent of GDP in 2014 and 2 percent of GDP in 2015.
The great-grandson of former President Domingo Diaz, who served for a year in 1948, De la Guardia was previously director of corporate banking at HSBC Panama.
“We have many important challenges and we’re going to have to work hard to keep Mr. Varela’s promises and keep growing a robust Panamanian economy,” he said.