Expect to see Panama’s open and stable political system continue to help promote economic prosperity, success in its real estate investment, and investment by Panama in its infrastructure in the future.
The democratic country of Panama has strong economic assets and is well governed which will exploit these assets to the good of its citizens and those wise enough to invest in Panama’s future. The Canal expansion will boost growth by an average of 1% in each of the next two years, which should partially offset the effects of a still weak U.S. economy.
Economists predict and expect the economic growth in Panama to be around 4.5% in 2010 and 5.5% in 2011. Solid economic growth, enhanced tax collection, and spending restraint have helped improve the government’s fiscal position over the past few years.
Fiscal improvements have helped reduce Panama’s public debt (domestic and external) from 70% of GDP in 2004 to an estimated 47% last year. In addition, good debt management has allowed the government to extend the average maturity of its obligations and reduce interest rates.
Over the medium-long term, Panama’s economy will continue to benefit from its position as a major international hub. Further, the Canal expansion is expected to boost growth above potential until 2014. EDC Economics does not expect any radical change in economic policy by the recently elected government.
Until the May 2009 Presidential election, the fight for political power in Panama had been essentially limited to the Partido Revolucionario Democrática (PRD) and the Partido Panameñista (PP). Both of these parties are on the right of the political spectrum and made up of...