Panama Real Estate Blog

Based on recent reports by the IMF, as well as Stand and Poor’s rating which improved to a BB+(stable), Panama is set to continue growing and adding value to any investor. Although growth is set to slow down, it is still fuelled by the Panama Canal expansion project, which is underway, as well as the fact that Panama was the fatest growing economy in the world in 2007.

Panama enjoyed a real growth rate of 11.2% in 2007, following on the average growth rate of 8% over the 2004 2006 period; and a predicted growth rate of 8% for the 2008 – 2009 period, this is confirmed by the International Monetary Funds revision of Panama’s growth rate from a 7,7% in April to an 8,3% prediction for the year.

Panama’s efforts in the canal expansion project as well as their increased competitiveness with regards to tourism, destination investment, communications and transportation have aided the country to continued growth and expansion despite an international deteriorating environment.

The locally situated advisory and financial services firm of  Indesa echoed the sentiments of the IMF, although estaimating an average growth over 2008 and 2009 of 9,2%. Panama’s biggest rivals in the South American marketplace include Uruguay and Peru, who have posted marginally higher growth rates in the first quarter of 2008.

Panama’s projected GDP for 2008 is expected to surpass the $24 billion, which is a substantial increase over 2007’s GDP of $19,7 billion. Panama’s superior performance is based on industries that are not reliant on the oil price based concerns, with the majority of well performing industries being in the service based sector. The service industry, coupled with the centrality of Panama, the Tocumen Airport acts as a hub between the North and South American continents, allowing easy access for vacation and business visits from both continents. Panama’s driving sectors in their economy include the transport, financial services, mining, construction, hopistality and telecommunications sectors – with the industries of mining and construction contributing the most, whilst outperforming all other industries.

Panama’s Colon Trade free zone, as well as the hotel and restaurant subsector have proved to be consistent contributors to the economy, with significant input by the financial services, real estate and export markets.

The Canal expansion project, due for completion in 2013 at a cost of $5,5 billion has impacted on a tremendously positive contribution to the local economy. Unemployment figures released indicate a massive drop of 6,3% over the 2003 to 2007 period. This expansion project will have numerous GDP growth and job creation benefits over the medium to long term.

Panama’s inflation remains in check, due to the pegging of the currency to the US dollar, and although the dollars’ devaluation has affected the inflationary figures, Panama remains well below the rest of Latin America, boding well for increased Direct Foreign investment. The negative effect of global food and fuel prices affects the inflationary figures, as with any other nation. The Central American is still seen as a very positive area for tourism and real estate, offering exceptional value for money with an established infrastructure and positive medium to long term development.

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