Latin America has certainly become one of the most interesting places in the world to do business in the coming years. And Panama meets many of the criteria for becoming the next economic miracle, the next Chile, ahead of Peru or Uruguay.
The country has four key advantages. First, the speed at which it is growing. The Panamanian economy has had more sustained growth than its neighbors. Between 1990 and 2000, while the average Latin American GDP growth was 3.8%, Panama's was 5.4%. Between 2000 and 2010, when the Latin American average growth was 3.4%, Panama's was nearly double at 6.4%. In 2010 it is expected to grow around 7%.
The second advantage is the evenly-distributed production structure. The Panamanian economy is not dependent on the availability of natural resources and is extremely well balanced. "No single sector accounts for over 9% of the GDR Not even the Canal, which accounts for no more than 6%," explains economist Marco Fernandez, a partner of the economic advisory firm INDESA.
The third key advantage is the best set of macroeconomic indicators in the neighborhood. With regard to fiscal policy, by law the public deficit may not exceed 2.5% of the GDP. Only in the last few months, to address the problems created by an extremely adverse climate, the deficit was temporarily allowed to reach 3%, but as explained by Vice Minister of Foreign Trade. Jose Domingo Arias, it will not reach that figure. In fact, the UN's Economic Commission for Latin America and the Caribbean (ECLAC) estimates that in 2010 the non-financial public sector will show a surplus equal to 1.0% of the GDP, in contrast to a 1.0% deficit in 2009.
It also forecasts a current account deficit of 3.5% of the GDP in 2010, and unemployment at 6.5%, showing a slight drop of 0.1 percentage points with regard to the previous December. Lastly, the year ended with an inflation rate of 3.5%, which is high for Panama, but certainly moderate by international standards.
The fourth key advantage that will become even more important in the future is that the most rapidly expanding sectors involve modern activities that clearly have the potential for years of growth: ports, warehousing and tourism.
While the logistics and transport industry increased its share of the Latin American GDP by 1.9 percentage points between 1990...