Page 23 - Preview (PA)

ECONOMY
RANKINGS
over the next few years. However, predictions for GDP increases of more than 5 percent through 2018 seem credible and sustainable. Continued growth will depend on maintaining ties to old partners while constantly working to build new trade relationships.Those who are unfamiliar with Panama’s economy may assume the country’s wealth is principally derived from the canal, but there is much more to the country’s success. “Panama’s economic diversity is an important element to understand,” notes Raymond Gatcliffe, General Manager of Citibank Panama. “That obviously has happened over an evolutionary experience, which is different from what you would first imagine Panama to be. At first glance, you would just be very zoomed in on the canal or the Free Zone.”
In fact, more than 75 percent of GDP derives from the service sector: canal revenue, associated logistics facilities, and container ports; banking and insurance; tourism; and flagship registry. Growth in the services sector slowed to 6 percent in 2013, down from nearly 10 percent in 2012. Panama’s small but vital agriculture industry grew more slowly in 2013 as well, but it remains a key pillar in the country’s economic strategy.
The high level of public infrastructure spending should keep growth strong in the short to medium term. Completion of the canal expansion project, now slated for early 2016, will slow this trend, although other infrastructure projects such as new metro lines and highways will continue to provide stimulus. In fact, in 2013 the construction sector grew by more than 30 percent, a number that should continue to increase over the next few years.
Panama’s financial system is the largest in Latin America. Banks, which make up over 80 percent of Panama’s financial assets, dominate the sector; securities firms come in second at around 17 percent. The IMF puts the financial sector’s total assets at more than three times GDP and bank credit to the private sector at more than 90 percent of GDP.
Free zones a crucial asset
Recent governments in Panama have made a sustained effort to maintain a business-friendly
Fitch & Moody’s
BBB
Tax Burden
136
Investor Protection
66
Corruption
93
Red Tape
21
Personal Freedom
34
Monetary Freedom
65
Trade Freedom
92
Technology
45
Sources: World Bank, CIA factbook, The Heritage Foundation, Transparency International.
PANAMA 21