PANAMA REPORT: Stiff Upper Lip
Nov 1, 2008
Panama is defiant in the face of the global storm. However, inflation is a problem and its positioning as a hub may end up backfiring.
by Andrew Beatty
Swatting aside global economic crisis, Panama’s veteran economy minister Hector Alexander in early October bumped up his country’s growth forecast for 2008 to 9.5%. It is a brash stance for a country born globalised, whose leading sectors – shipping, commerce, construction and banking – make up around 43% of GDP and are inextricably woven into the world economy.
The government’s strategy of turning Panama into a regional hub – the Singapore of LatAm – only increases the exposure. Some 50% of Panama’s exports, including trans-shipping, now go to the US. Still Alexander is optimistic. “The economy is strong”, he boasts.
Government bullishness is a significant turnaround from the beginning of the year. After a strong end to 2007 – which saw economic activity jump 11.8% in Q4 – rising worries about inflation, overheating and contagion...
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