Notes On The Present Condition Of The Panama Economy
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During the course of the recent global economic crisis, there have been many countries facing difficult economic challenges. Some countries, however, have managed to weather the storm. A close look at the Panama economy reveals a country that has made its way through the crisis and is primed to emerge in an excellent economic position. Fiscal discipline, massive investment projects, and solid industrial performance, has allowed Panama to keep its economy growing as countries all around it have flounder.
Panama's economy grew 2.4% in 2009, down from between 8% to 11% in the previous years. Still, in a global and regional climate that saw many national economies realize negative growth rates, any gain is significant. Panama's internal projection for growth in 2010 is around 5%. This may be optimistic, though independent forecasts from others hover between 2.5% to 5%.
Two main contributing factors for Panama's continued growth are its strong financial sector and its active construction industry. In other countries, these sectors have seen sharp declines. The telecommunications sector has also made a good showing in Panama. Overall, Panama's real income and employment rates have been steadily increasing and will undoubtedly serve to re-energize consumer activity in the country. From 2003 to 2009, Panama's unemployment rates constantly decreased. While it rose in 2009 from 5.6% to 7.1%, many of its neighbors, and many countries around the word saw double-digit employment rates at the same time.
A major contributor to Panama's economic well-being has been the massive $5 billion dollar expansion of the Panama Canal. The Canal project in particular has helped to boost domestic and foreign confidence in the country's economy. Not only has the project provided jobs and contracts that have helped buoy the economy, but it promises to be a source of National Revenue over time as well.
Another source of economic strength has been the current government. President Ricardo Martinelli and his center-right administration have implemented successful tax reforms and fiscal discipline programs to increase revenues, control debt, and expand investment projects. While Martinelli's popularity has recently begun to waiver in the face of rising crime rates and an an increase in value-added tax, his approval ratings remain quite high.
The economic outlook in Panama has started to begun to attract foreign investors now as well. In November of 2009 Standard and Poor's raised the credit rating outlook for Panama to positive. In April of 2010, Fitch Ratings rated Panama's with its first ever investment grade rating. No doubt, such acknowledgment will lead to yet more foreign participation in Panama's impressive investment projects.
Panama is already a primary destination for foreign investment. The impressive Canal project is part of an ambitious five-year, $12 billion investment plan launched by the government. The plan will fund projects all across the country designed to upgrade infrastructure and public works, and improve Panama's fiscal sustainability. At the same time, while Panama's public debt ratios are relatively high, its net debt is less than 2% of the GDP.
Panama's economy is one of the fastest in the region, and in the world. An impressive investment plan for public projects and disciplined tax reform have combined to sustain growth even in the midst of a difficult global economy. Continued foreign investment and disciplined fiscal policy will most likely keep the Panama economy moving forward for at least the foreseeable future.
Article Source: Articlelogy.com
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