Category Archives: Economy

How was the economical situation in Latin America and Central America in 2009 compare to 2008?

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This is a tough question to answer briefly, but here goes:  Latin America (including Central America) fared better in 2008 than in 2009 in terms of economic growth, since LA countries were not directly embroiled in the problems that took down the US economy.  However, because Latin America depends so much on trade with the countries that WERE affected, the global fallout from the crisis did catch up with LA economies in 2009, with exports falling 24% on the whole (though Central America did much better than the rest of Latin America).  The last quarter of 2009 showed strong recovery, and projections for 2010 indicate growth of 4.1%.  This is attributed to fiscal and social policies to support businesses and households, and reduce the effect of global economic turbulence.

How was the economical situation in Latin America and Central America in 2009 compare to 2008?

Posted on by
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This is a tough question to answer briefly, but here goes:  Latin America (including Central America) fared better in 2008 than in 2009 in terms of economic growth, since LA countries were not directly embroiled in the problems that took down the US economy.  However, because Latin America depends so much on trade with the countries that WERE affected, the global fallout from the crisis did catch up with LA economies in 2009, with exports falling 24% on the whole (though Central America did much better than the rest of Latin America).  The last quarter of 2009 showed strong recovery, and projections for 2010 indicate growth of 4.1%.  This is attributed to fiscal and social policies to support businesses and households, and reduce the effect of global economic turbulence.

Panama Economy At A Glance 2009

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In times of global uncertainty, the economic outlooks of most countries are often conservative at best, but economists and investors are now looking to the bright prospects in Panama.

Eco-tourism, real estate, banking, international shipping and the world’s second largest free trade zone mean big business flows through the isthmus.  Always a strong economy in Latin America, with low inflation (thanks to a US dollar currency), a stable democracy and key geographical position, it is now poised to become a powerhouse player in the region.

In fact, the International Monetary Fund predicts Panama is set to grow more than any other Latin American country this year.

Big Business:

  • Eco-Tourism
  • Real Estate
  • International shipping
  • Colon Free Trade Zone
  • Banking

Economic Factors:

  • US dollar economy
  • Low inflation
  • Panama Canal
  • Steady GDP growth

Future Projects:

  • Panama Canal Expansion Plan
  • Free Trade Agreement with US
  • $6 billion regional refinery
  • 14 thermal and hydroelectric plants

Panama has for some time now been in a privileged position, not just in Central America, but in the western hemisphere.  The Panama Canal, built at the start of the 20th century, turned this tiny tropical haven into a major shipping hub for the world’s ocean trade.

With the Canal came foreign business and residents, infusing the sleepy paradise with a new energy and bringing the momentum of modernization.  Today, Panama is set to take another momentous step into a new chapter of its history.

Tourism now stands as country’s top sources of income, receiving more than 700,000 visitors annually to its pristine beaches, vibrant rainforests and cosmopolitan capital city.

The influx of visitors has also brought with it a boom in construction— hotels, condominiums, resort complexes and peripheral services such as restaurants and shops, are springing up along the country’s famous coasts and in Panama City in particular.

The Panama Canal itself will receive a $5 billion upgrade in the coming years, promising to create up to 50,000 new jobs in the region, as well as ensuring the Canal’s competitiveness in world shipping for years to come.  In fact, analysts predict the expanded canal will directly account for doubling the country’s gross domestic product (GDP) by 2025, and increase business investment in the Canal Zone by 40 per cent.

New projects to further stimulate the economy include a free trade agreement with the United States, currently in negotiation, the recent announcement by Occidental of a $6 billion regional refinery, and 14 new thermal and hydroelectric plants.

These factors and more, have given Panama a unique position in the Latin American world — as a economy growth leader and a stable, thriving market for business and investment.

Investment Stability

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One of Panama’s consistent attractions has been the safety for foreign investors.  Its stable, dollar economy with low inflation and consistent growth has been one of the key reasons private investors and multinationals alike have chosen to invest in Panama.

Trade, services, banking, real estate, tourism, manufacturing, transportation logistics, communication technologies, and many other sectors have found Panama offers them the best advantages for business.

Indeed, more than $5.13 billion in Direct Foreign Investment entered the country from 1997-2003, despite the slight economic slump following the 1999 withdrawal of U.S. forces and personnel after handing over control of the Canal.

Beyond a generally positive economic climate, however, there are direct protections for foreign investment, in the form of legislation to safeguard and attract outside capital.

The Panamanian Constitution:

  • Guarantees private property, freedom of investment

Real Estate Law 54 of 1998:

  • Guarantees equal treatment of foreign and national investors
  • Provides stable tax regimes
  • Guarantees the repatriation of capital, profits, dividends, etc.

Law 33 of 2000:

  • Offers a special tax regime for micro, small and medium businesses

Foreign investors enjoy the same constitutional rights as residents to private, intellectual and industrial property, and with few exceptions, can own property and do business in Panama.   There are laws that grant equal treatment for foreign and national investors, provide stable tax regimes, guarantee the repatriation of capital, profits, dividends, etc, and offer tax exemptions and preferential interest rates.

There are also trade agreements in place that govern the benefits and conditions of investing in Panama, such as the Multilateral Investment Guarantee to promote and protect investments.

A Free Trade Agreement is currently under negotiations with the United States, which if approved would provide even greater fairness for U.S. investors in Panama.  Currently, U.S. foreign direct investment in Panama totals some $25 billion.

Nearly half of Panama’s total imports come from the United States, and it’s believed a Free Trade Agreement will help to further stimulate Panama’s economic growth and development.