Economy
From The Report: Panama 2014
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Since gaining control of the Panama Canal in 1999, the country has recorded impressive economic expansion. GDP growth averaged 6.8% from 2000 to 2012, according to the World Bank, and double-digit growth for four of the past seven years, government data show. Public sector spending on national infrastructure has emerged as the primary driver of expansion in the past few years as the country prepares for the post-Panamax era of the canal. The canal’s impact both domestically and internationally is set to expand substantially upon the completion of a third set of locks, guaranteeing long-term economic progress. The already-established logistics and financial sectors will continue to play leading roles in the wider economy in the long term, while nascent sectors such as tourism and mining show significant potential for growth. Bureaucracy and poor human resources development remain the main hindrances to national economic development.

This chapter includes interviews with Frank de Lima, Minister of Economy and Finance; Nicolás Ardito Barletta, Director-General, National Centre for Competitiveness; and José Pacheco Tejeira, Vice-Minister of Foreign Trade.

Articles from this Chapter

Overview

On the up: Public investment continues to drive one of Latin America’s fastest-growing economies
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Panama has leveraged its geostrategic position as the crossroads between the Americas throughout history, particularly over the past 15 years. Since 1999 – when the country finally gained control of the Panama Canal – economic progress has been all but unstoppable, with an average GDP growth of 6.8% from 2000 to 2012, according to data from the World Bank, and double-digit growth for four of the past seven years, according to government figures. Having significantly reduced the national debt,…

Interview

Sustainable spending: OBG talks to Frank De Lima, Minister of Economy and Finance
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Interview:Frank De Lima Which sectors are best placed to capitalise on the expansion of the Panama Canal? FRANK DE LIMA: The canal has been under Panamanian control for 13 years now, and while it has already transformed the country’s economy, we are still learning how to fully leverage this asset to drive wider growth and diversification. We are expanding the canal and opening two new port concessions – one on the Pacific and another on the Atlantic. There are opportunities for port operations,…

Analysis

Magnetic appeal: Strong legal and free trade zone frameworks shore up investment growth
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Surging economic growth, a rapidly improving infrastructure network and having one of the world’s main trade routes have allowed the country to transform itself into a popular destination for foreign direct investment (FDI) over the course of the past decade. Simultaneously, the presence of an attractive regulatory framework providing numerous incentives, as well as a strong free trade zone system, have been equally as important in providing the assurances and encouragement needed to attract and…

Interview

Expanding horizons: OBG talks to Nicolás Ardito Barletta, Director-General, National Centre for Competitiveness
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Interview:Nicolás Ardito Barletta How can Panama diversify while still leveraging its advantage in international connectivity? NICOLAS ARDITO BARLETTA: I think it is important to note that the cluster of industries built on connectivity is already diverse. The cluster includes 26 activities that do not all move within the same business cycle. As a small market economy, our growth will be export-driven. As a result of our connectivity, 81% of GDP is services and 80% of exports are services.…

Interview

Looking ahead: OBG talks to José Pacheco Tejeira, Vice-Minister of Foreign Trade
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Interview:José Pacheco Tejeira How is Panama working to encourage and facilitate increased foreign investment? JOSE PACHECO TEJEIRA: Proinvex is focused on attracting more European and Asian investors, and we are also developing the opportunities being created by new free trade agreements (FTAs). Encouraging the establishment by multinationals in Panama is also a very big a part of our strategy. Currently there are 105 multinational firms with regional headquarters in Panama. In what sectors…

Analysis

Tax man: New authority eyes improved transparency and a more efficient tax code
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Heavy government spending on new social programmes and overhauling the infrastructure network has amplified the importance of increasing public sector revenue, income and in particular tax collections. However, administrative strategy has focused on maintaining or even lowering tax rates across the board while simultaneously closing loopholes and preventing tax evasion. The government’s tax administration underwent fundamental reform when Law 24 was passed in April 2013 creating a new autonomous…

Analysis

Capitalisation of trade: Adding value to a growing trade and logistics centre
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Its position at the heart of the Americas, combined with one of world trade’s most vital pieces of infrastructure, will continue to ensure the flow of goods through Panama. In fact, the country’s status as a major trading centre will only develop further following the completion of the $5.25bn expansion of the Panama Canal and the arrival of post-Panamax ships. This could be further compounded by a growing collection of free trade agreements (FTAs). However, as the country continues to watch…