Panama’s Economic Horizon

Two panels at AS/COA’s 2012 Panama conference looked at Panama’s economic outlook. The first focused on the U.S. free trade agreement with Panama, signed into law by the U.S. Congress in October 2011. The two panelists, Panamanian Minister of Foreign Relations Roberto Henriquez and USTR Deputy Assistant for Central America and the Dominican Republic Leslie O’Connor, discussed the path ahead for the trade pact, which was stalled in the U.S. Congress for four years.

Henriquez discussed the FTA’s role in his government’s economic development plan, which seeks to take advantage of Panama’s strategic geographic location and strong economic performance—the country grew 10.6% in 2011. The plan focuses on four key sectors for enhancement: logistics, tourism, agriculture, and financial services. The U.S. trade representative highlighted Panama’s strategic importance for the United States because of its location, its role as a logistics hub, and because of the Canal: half of all merchandize going through the waterway is either destined for or comes from the United States. The comprehensive nature of the FTA will make Panama a predictable and reliable destination for U.S. investments, said O’Connor, and both she and Henriquez stressed the fact the trade pact is still being rolled out. The minister stated that the implementation of the FTA can be more complex than the actual negotiations themselves.

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The second panel focused more on the numbers behind Panama’s economic evolution and the ways the country can take advantage of good fortune in the future as well as successfully navigate risks. Frank de Lima, Panama’s minister of Finance and Economy, gave a presentation that covered the country’s strong economic performance, low debt ratio, and large public-investment plans. The economy’s diversification helped Panama weather the world economic crisis without major damage and a sovereign wealth fund currently in the planning will help further buffer the country from any future economic shocks or natural disasters.

Citibank Panama’s Marcelo Gorrini< talked about the steady and robust success of Panama’s banking sector. Gorrini said that the financial market in Panama has had such success because it has an attractive legal framework; open conversation between regulators and those being regulated; stable, predictable economics; a dollarized economy; a focus on prudent banking; and good investment returns.

Standard & Poor’s Roberto Sifón Arevalo discussed the domestic and regional risks the country faces, as well as the opportunities it can take advantage of to further its prime economic position in the region.

David Gacs is new media manager at AS/COA Online.