PANAMA: Boom town blues

Jul 1, 2012

Economic growth in double digits, ambitious infrastructure and mining plans as well as a real estate boom. Yet despite vast public investment, the government’s popularity is still sinking

By Lucien Chauvin

Panama continues to lead Latin America in terms of economic growth. In the first quarter of this year it clocked up GDP expansion of 10.6% year-on-year and the official forecast for 2012 is firmly in double digits.

Growth through the end of much March was a full point above the final quarter in 2011 and has helped the country register the lowest unemployment rate in the region, 4.5%, and a surge in trade. Exports at the Colon Free Zone, which represent the bulk of exports, were $4.1 billion in the first quarter of the year, $1 billion more than the same period last year. Total exports in 2011 were $13.2 billion.

Inflation was 6.1% in 2011 and stood at 6% through May – higher than the authorities would like, but partly a function of tight labor supply and high fuel prices. Analysts expect...

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