RECENT PRESS COVERAGE ON PANAMA FOR BUSINESS
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
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
Panama, for the second consecutive year, depicts the strongest competitive position in Central America and is the only country in the isthmus that manages to improve its performance, entering the top 50 at 49th position. The country has remained relatively stable in most competitiveness drivers. Overall, it benefits from important strengths in its efficient financial market (16th), solid transport infrastructures (39th) [first place in latin America], and very good technological adoption (12th), especially through FDI, where it is ranked 4th. In dynamic terms, it is important to highlight the progress the country has made in the quality of its port and air transport infrastructure (5th and 15th, respectively) and its fostering of stronger domestic competition (43rd).
World Economic Forum, Competitiveness Report 2011-2012
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.
”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
Panama’s government bond rating was upgraded to Baa3 from Ba1 to reflect significant improvement in the country’s fiscal and debt positions and favorable prospects for further consolidation in the government accounts over the medium term….
The country’s economic resilience is strongly supported by a dynamic service-based economy. In recent years, Panama’s role as a transshipment and logistics hub between continents and within the Americas has strengthened. Large scale investments, including the widening of the Panama Canal, should ensure strong rates of growth in the medium term. Despite a short track record of fiscal responsibility, Panama’s institutional strength benefits from general policy consensus among the major political forces.
Moody’s Credit Opinion June 2010
On July 21, 2011, Standard & Poor’s Ratings Services affirmed its ‘BBB-/A-3’ long- and shortterm sovereign credit ratings on the Republic of Panama and revised the outlook to positive from stable. Our transfer and convertibility assessment on the country remains unchanged at ‘AAA’.
· Panama’s GDP growth continues to perform better than expected and we think it will likely remain strong over the medium term.
· Although the government faces challenges in implementing large infrastructure projects, the country’s debt burden has continued to decline.
· As a result, we have revised the outlook on our long-term foreign- and local currency sovereign credit ratings on Panama to positive from stable.
· The positive outlook is based on our view that stronger growth and increased infrastructure spending could result in faster-than-expected improvement in the sovereign’s financial profile.
Standard and Poor’s July 2011
The Rating Outlook is revised to Stable from Positive.
The upgrade reflects Panama’s solid economic growth prospects and favorable government debt dynamics. Panama’s highly favorable investment cycle is underpinned by the Canal expansion, an ambitious public investment program and strong foreign direct investment flows. Favorable economic growth combined with continued fiscal discipline has allowed for a sustained decline in government indebtedness, with debt to GDP of 43% nearly converging with the ‘BBB’ median.
Panama’s ratings are also supported by the country’s stable banking system, political stability and the consensus among political parties on the main thrust of macroeconomic policies. The country’s demonstrated resilience to external shocks is also noteworthy.
Fitch Ratings June 2011
Visit www.meetpanama.com.pa for more information on Panama for investors.