Panama is one of the rising stars of Latin America’s economy. The construction of large infrastructure projects, such as the $5.2 billion Panama Canal expansion and a $1.8 billion subway in the capital city, have boosted the country’s economy to 10.5% growth and reduced unemployment to 4.8% in 2012.
It seems that the real challenge for Panama will be to position itself as a world-class logistics hub if it wants to consolidate its recent economic success. The inauguration of the new locks in early 2015 may give Panama a boost towards creating the kind of infrastructure it needs to truly take advantage of its strategic location.
In economic terms, the last decade in Central America and the Caribbean may well be dubbed “the rise of Panama.” Between 2001 and 2011, this country of 3.6 million people doubled its GDP, and commanded a 45% employment expansion.
This outstanding evolution has naturally been accompanied by several double-digit growth figures, the latest being 10.4% in the second quarter of 2012, and low unemployment levels, currently at 4.2%.
In the midst of the last few years’ global economic hardship, Panama’s achievements might sound like a great feat. But according to former President, Nicolás Ardito Barletta (1984-85), one of the country’s top economists, there is a sense that it was somehow meant to be. “Panama’s economy has been transformed over time. The handover of the Canal boosted the services-based economy, enabling the further development of a conglomerate of interconnected activities that revolves around the Canal and that generates 62% of our exports,” he says.
That conglomerate, according to Barletta, “includes the ports, which moved more than 6.6 million containers last year, the Colon Free Zone (CFZ), with yearly activity topping $25 billion and Tocumen International Airport, which connects Panama with more than 30 countries and through which 24% of the CFZ’s exports leave. All that “is complemented by a dollarized, world-class banking system and the best telecommunications infrastructure in Latin America. If I have to sum up this country in one word, that would be ‘connectivity’,” he adds.
It is this connectivity that puts Panama on the logistical map of the world. “These are the forces Panama has been taking advantage of. And they are all long-term forces. This is not a passing trend,” he concludes.
This post is also available in: Spanish