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Economy Continues to Grow in Panama

Panama seen as an oasis in dry economic times

Oct 27, 2010

CHICAGO - Panama is enjoying the strongest growth in Central America, and will lead all of Latin America through 2015, according to the International Monetary Fund (IMF). The Canal expansion plan and ambitious infrastructure investment bolster economic growth while attracting multinational corporations, real estate developers, retirees, and savvy travelers to this emerging nation, whose diversified economy is driven by transport, banking, communication technology, and tourism. Investors worldwide are no longer just passing through Panama's infamous Canal, but are choosing Panama as a financial haven.

Panama's economic activity rose 6.24% in July, well above the expected 5%. As it embraces its 11th consecutive month of economic growth, international investors are lining up to buy Panama real estate. "Between the expansion of the Canal and the continuing double-digit increases in tourism, it's hard to see how Panama won't become Latin America's greatest success story," says Benjamin Loomis, developer of a new Panama real estate project The Resort at Isla Palenque. The forward-thinking Loomis was ahead of the curve in 2007 when he chose Panama for the site of his luxury eco-resort and vacation homes, which are currently being developed on a Panama island property.

The future looks promising for Loomis. The Wall Street Journal recently published that Panama's hotel activity grew 9.5% so far this year. The revenue and job opportunities created by growth in tourism and real estate development are projected to be strong economic contributors in the coming years, and they're not the only industries that have attracted multinational firms to invest in Panama: Proctor & Gamble, Dell and DHL all have headquarters or regional hubs in Panama.

Panama has also emerged as the Latin American country with the best business climate, according to the Latin Business Index, surging past Chile for the top spot this year. The Panama Guide reported that, according to the Ministry of Commerce and Industry, direct foreign investment grew 26% in the first part of this year, and companies have invested approximately 1.1 billion dollars to open new business in Panama in just the first six months of 2010. The Latin Business Chronicle deemed Panama the "Latin American Star."

However, Time Magazine paints Panama's pro-business President Ricardo Martinelli as a possible political strongman while The Wall Street Journal speculates that conceit might bring him down. But Ambler H. Moss, Jr., Professor of International Studies at the University of Miami and former U.S. ambassador to Panama, believes that President Ricardo Martinelli has what it takes to sustain Panama's impressive growth. "With a solid growth rate even in difficult times, all of the country's political and economic signs are favorable," he says.

Martinelli's five-year plan consists of a comprehensive investment plan with a focus on infrastructure. Road expansions, highway systems, hospitals, airports, and a metro system are already underway, giving investors even more confidence in Panama's upwardly mobile trajectory. "Panama now has 20 years of unbroken electoral democracy [and] the Panama Canal, entirely in Panamanian hands since 2000, has been hugely successful," says Moss. "This is impressive for a country of 3.4 million people."

Panama seen as an oasis in dry economic times
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