Panama enjoys a reputation as a haven from political and
economic troubles in more volatile parts of Latin America. But
that is not helping the country avoid the current downdraft.
The country's economy probably grew only about 1% last year,
according to Domingo Latorraca, vice-minister of economy, and
for 2002 he predicts growth of 1% to 1.5%. "There is
uncertainty about the world economy. The effects of September
11 are still to be seen clearly. It is prudent to be cautious,"
Regaining Confidence and Growth
Panama is struggling to convince the credit rating agencies and investors that it is correcting weaknesses in its fiscal and economic policies. But long-term investment opportunities are strong.
The bursting of the consumer credit bubble of the late 1990s
has left domestic demand depressed. Lower-than-expected growth
in 2001 hit tax revenues and forced Panama's economic team to
revise its original zero-deficit budget target. Latorraca says
the non-financial public sector deficit in 2001 will amount to
Fiscal policy has been a political battleground. By the end
of 2001 there was still no...
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