A recent analysis by the Spanish group Banco Bilbao Vizcaya Argentaria (BBVA) revealed that Panama’s economy will maintain growth rates of 8.1% and 7.6% in 2013 and 2014, respectively. The Panamanian economy will sustain its growth rate primarily due to public inversion, but also through the development of large residential, mining and energy projects financed through the private sector, leading experts to declare Panama the most dynamic country in Latin America.
According to Juana Téllez, the director of BBVA Research for Panama and Colombia, the rate of inversion in 2011 was equivalent to 26.6% of gross domestic product (GDP) and 29.5% in 2012. This year the GDP will ascend to 31.5%, and to 31.5% in 2014, “very close to the maximum rates observed in the countries of southeast Asia”. In comparison, the average rate in Latin America is less than 25% of the GDP.
The main indicators of economic acceleration for 2013 are energy consumption, vehicle sales, importations from Colon’s Zona Libre, and credit. On the other hand, other variables demonstrated a de-acceleration during the first months of the year, such as the monthly index of economic activity, tax collection and cement production. Overall, Panama’s economy has grown an average of 9.7% annually between 2010 and 2012, boosted primarily by the mining and construction sectors.
Such positive developments have led economists to pronounce the last decade as “the rise of Panama”. Between 2001 and 2011 the country has doubled its GDP and expanded employment by 45%. Double-digit growth periods (10.4% in the second quarter of 2012, for example) and low unemployment levels, currently at 4.2%, have also accompanied this outstanding growth.
Panama’s economic success has not gone past unnoticed by Americans, as evidenced by a New York Times travel article published earlier this month titled “Panama City Rising”. The country’s unprecedented economic performance, which can be traced back to 1999, when the United States returned the Panama Canal and surrounding Zone back to Panamanians, has also enriched Panama’s artistic and cultural scene, converting the capital city into a world-class metropolis complete with luxury hotels, cutting-edge museums, restaurants serving exciting culinary innovations, and a variety of dance, music and film festivals.
Naturally, however, great changes also bring about some contradictions. New skyscrapers look out onto the bay that is still the source of livelihood for artisanal fishermen. In another example, the New York Times pointed out the paradox of having a $2 billion subway (the first in Central America) to be completed soon, and yet a lack of sidewalks means that getting around could be difficult once passengers get off the subway and need to walk the rest of the way to their destination. Whether the country’s bright future will bring prosperity to all of its inhabitants depends on all of us. Téllez, the economist from the BBVA, warns that growth rates will be sustained in the long run only if the country finds more private sources of investment, which could replace the current public expenditure once major works like the subway and Canal expansion are completed. She recommends the establishment of mechanisms for participation in the private sector in order to attract strong flows of internal and external investment, particularly in the mining and energy sectors.
What does all of this mean for those thinking about relocating to Panama? That this rising star of a country offers a heady combination of exceptional living standards and exciting investment opportunities. Moreover, these favorable economic forecasts mean that now is the time to get moving, if you haven’t done so already.