The Press: What They're Saying About Panama For Business
Panama City, Panama: The cheapest city in the world for foreigners to live.
It’s been 12 years since Panama regained control of its canal, and the country’s economy is booming. Cranes stalk the skyline of the capital, Panama City, where high-rises sprout one after the next and immigrants arrive daily from around the world. Among those who have landed en masse in recent years are American expatriates and investors, who have banked on Panamanian real estate by building hotels and buying retirement homes. The passage of the United States-Panama free trade agreement in October is expected to accelerate this international exchange of people and dollars (the countries use the same currency).
-Economist Intelligence Unit’s Worldwide Cost of Living Survey, 2012
New York Times
Among the notable development projects is the Panama Canal itself, which is in the early stages of a multibillion-dollar expansion. The project will widen and deepen the existing canal and add two locks, doubling the canal’s cargo capacity. For those who want to see the waterway as it was originally designed, now is the time. The expansion is expected to be completed by 2014, the canal’s 100-year anniversary.
-New York Times, 2012
World Economic Forum Report
According to the 2012-2013 Panama is still the second most competitive economy in Latin America. “Panama, at 40th place and nine ranks up since last year, continues its steady progress and consolidates its position as the most competitive economy in Central America. Panama leverages its traditional strengths with its very good transport infrastructure (33rd), especially for ports (4th); its macroeconomic stability (53rd), despite the worrying inflation rate of nearly 6 percent; its efficient financial markets (9th); its relatively high levels of competition (31st) and openness to DI (9th). The country has also made progress in addressing some of the most pressing weaknesses that have traditionally hindered its competitiveness potential.”
-World Economic Forum, Competitiveness Report 2012-2013
Standard and Poor
“On July 2, 2012, Standard & Poor’s Ratings Services raised its long-term foreign- and local-currency sovereign credit ratings on the Republic of Panama to ‘BBB’ from ‘BBB-‘. At the same time, Standard & Poor’s raised the short-term ratings to ‘A-2’ from ‘A-3’. The outlook is stable.”
We expect Panama’s GDP growth will remain strong over the medium term, boosted by the country’s high and diversified investments.
In addition, double-digit revenue growth since 2010 has allowed the Panamanian government to boost public infrastructure investment without increasing the country’s debt burden.
The stable outlook balances our view that Panama’s economic growth prospects and fiscal flexibility are strong against the challenges that could emerge in transitioning to a less buoyant environment.
-Standard and Poor’s, July 2012
Moody’s Rating Agency
” Moody’s Investors Service has upgraded the Government of Panama’s bond rating to Baa2 from Baa3. The outlook has been revised to stable from positive.”
“Panama’s economy has grown at an average rate of 7.3% during the past ten years, the highest rate of growth in Latin America and among the highest in the world. Despite weakening external conditions, Panama continued to show remarkable economic dynamism in the first half of 2012 when GDP increased at an annualized rate of 10.6%, roughly the same pace it registered during 2011. Though recent growth rates are not sustainable, medium-term growth prospects remain strong thanks to the expansion of the Panama Canal, the Martinelli administration’s ambitious infrastructure investment plans, and the recent ratification of the free trade agreement by the U.S. Congress. Together, these developments should improve Panama’s position as a global logistics hub. Panama’s economy will also benefit from a massive new copper and gold mining project.”
-Moody’s Credit Opinion, October 2012
Fitch Ratings Agency
Fitch Ratings affirmed Panama‟s sovereign ratings at “BBB‟ with a Stable Outlook”
“The ratings are supported by the country‟s strong economic performance, which has resulted in the convergence of its per capita income with the “BBB‟ median. Panama‟s well-institutionalised dollarisation and solid financial sector have contributed to anchor macroeconomic stability. A sharp government debt reduction driven by robust growth and modest fiscal deficits also supports the ratings.”
-Fitch Ratings, May 2012
International Monetary Fund
“Panama’s growth rates are among the highest in the region, largely owing to strong fundamentals and prudent policies. Real GDP growth has averaged 8 percent over the past five years which, together with successful fiscal consolidation, has resulted in a rapid decline in debt ratios. Partly for this reason, Panama’s sovereign debt is now rated one notch above investment grade, on par with Brazil and Mexico.
The recent ratification of a bilateral Free-Trade Agreement (FTA) by the U.S. Congress will help sustain private investment (Box 1). In July 2011, Panama was taken off the OECD’s “grey list” of tax heavens upon signing 12 double taxation treaties, though it still has to complete the peer review process.”
-International Monetary Fund, Article IV Consultation, 2012
American Way Magazine, Panama Cover
“I expected Panama City to be sleepy and old: wide-brimmed hats, hammocks and excessive pride over a technological feat that’s nearly 100 years old. This is not what I’m seeing. I haven’t been to Shanghai. I’ve never seen Dubai. I was too young to see Las Vegas in the 1960s. But I’m finally seeing a city grow in fast-forward: buildings crawling up like silver sea monkeys; new infrastructure struggling to keep up with traffic; foreigners flocking to open factories, hotels and restaurants; construction vehicles blocking street after street. With a 10.5 percent growth rate, Panama’s economy is expanding faster than China’s. And if you told me that’s where I am, I would believe it.”
-American Way Magazine, October 2012
“On a humid stretch of Pacific coast in one of the poorest parts of the Americas, somebody seems to have misplaced a chunk of Manhattan. The 50-storey skyscrapers of Panama City jut out of the jungle like nowhere else in low-rise Central America. Panama’s smart banks, open economy and long queues of boats at its ports have caused many to compare it to Singapore, another steamy success story. Panama’s president, Ricardo Martinelli, made his country’s first state visit there in 2010 and later said “We copy a lot from Singapore and we need to copy more.”
Panama is not even one-fifth as rich as its Asian model on a per-person basis. But Singapore would envy its growth: from 2005 to 2010 its economy expanded by more than 8% a year, the fastest rate in the Americas. The IMF expects it to grow by over 6% a year during the next five years. Panama will soon overtake Costa Rica and Venezuela in GDP per head. Accounting for purchasing power, it is one of the five richest countries in mainland Latin America.”
-The Economist, July 2011
Latin Business Chronicle
“The Central American nation replaced Uruguay as having the highest technology level in the region, fueled by a surge of Internet users and computer sales, according to the sixth annual Latin Technology Index from Latin Business Chronicle.
Internet penetration in Panama was up 43 percent and personal computer sales jumped 21 percent, the data show. The index uses 2010 technology data from the International Telecommunications Union, Computer Industry Almanac and the Santiago Chamber of Commerce and population data from the International Monetary Fund and the Population Reference Bureau.
Eduardo Jaen, who heads Panama’s National Authority for Government Innovation, attributes the rise to government support for Internet access and success at luring new businesses into the modern capital. More than 60 corporations, including tech giants Dell and 3M, shifted regional headquarters to Panama since a tax exemption law was passed in 2007.”
-Latin Business Chronicle, 2011
Christian Science Monitor
“José Domingo Arias, vice minister of foreign trade, points instead to the government’s canal expansion—perhaps the largest remodeling job in history—and additional investments in new airports, seaports, railways, and roadways. What the government is doing today, he says, is simply modernizing its traditional industry niche to make Panama a more complete global player as a value-added logistics hub for the Americas. And the push to expand in new directions, he adds, is not erratic behavior, but rather a sign that Panama is grown up and ready to diversify.
â”During the colonial era” says Mr. Arias, “Panama [then part of the Spanish Empire] was a transshipment route to move gold safely from Peru to Spain. And that implied a business of logistics, moving merchandise from the ships to pack mules, then organizing the security of its transport across land, then repacking another ship that would leave for Spain. That was the beginning of our logistics and shipping industry.”
But those 500 years of history suggest that Panama is best suited to be a financial, trade, and logistics center, and risk analyst Ms. Berkman agrees. If the president can stay focused on that, without getting too distracted by other development models along the way, it might yet be enough to turn Panama into Latin America’s only first-world nation.”
-Christian Science Monitor, March 2011
“Despite financial turmoil in Europe, its banks—exposed to the sterilising light of a recent US trade deal—are attracting deposits. Taxes have been cut, but more people are paying them. The Panama Canal is also thriving. Ever more ships are using the 80km waterway, and the government continues to extract higher tolls from them. Over the past decade, this tiny country has clearly managed the canal better than the Americans ever did. Mr Martinelli now wants to take Panama further and turn it into a central American Singapore—another skyscrapered, hi-tech logistics hub in the Tropics.”
-Financial Times, November 2011