Panama Growth, Trade, Business, and Real Estate

Panama Growth

The International Monetary Fund (IMF) just released its forecast for economic growth in Central America. The collective economies from Guatemala to Panama will grow by an average of 2.7 percent next year according the IMF. Panama will lead the pack at 5 percent. The IMF predicts a growth rate of Panama's economy of 6.3 percent in 2011.

The IMF states that Panama's growth rate dipped to 3.3 percent in 2009 meaning that Panama never had a recession while virtually all of the rest of economies in the world experienced substantial contraction.

Panama Trade

Although the signed free trade agreement with the United States is still awaiting approval by the US senate a free trade agreement with Canada is progressing and Panama's free trade agreements with Costa Rica and Singapore have helped reduce prices and promote trade for several years. Panama is current part of a delegation in Brussels negotiating a number of issues, including a trade agreement giving better access of agricultural products to the Common Market.

Whether trade stops in Panama or not at least 5 percent of sea trade in the world passes through the Panama Canal. That number may well double with the completion of the much larger set of locks in 2014 when the Panama Canal Expansion is completed. A key factor for Panama is the expansion of facilities along the old Panama Canal Zone. When the USA ran the canal it kept the area for five miles on either side as a military reserve. With the exit of the USA Panama is developing port facilities, logistics sites, and even assembly operations for export.

The increase in trade is expected to boost Panama's economy even further as the recession lifts elsewhere and global trade picks up again.

Panama Business

For much of Panama's existence a common source of development capital for the small business person was the pawn shop! Credit checks were difficult if not impossible and much property was not titled so that banks would not issue credit based on land and buildings a collateral.

Two things have happened over the years. The landmark work of economist Hernando De Soto showed that by titling property throughout the third world capital could be unleashed for growth and prosperity. Panama has aggressively pursued titling of property of many years with excellent results and the flourishing small business activity in Panama demonstrates.

The second factor has been a recent change in the credit law allowing more comprehensive and accurate credit checks. With the ability to demonstrate credit worthiness, and perhaps having property for collateral, small business owners are not cuing up at the pawn shop for the cash to launch a new business initiative.

More so than the Canal Expansion and growth in foreign trade the change in Panama's credit laws has lead to greater prosperity of Panama's middle class. This, in turn, has lead to higher car sales and the purchase of more expensive homes and apartments. This aspect of Panama's prosperity has been as much a driver of real estate prices as the North Americans and Europeans purchasing high end property on the Bay of Panama.

Panama Real Estate Recovery, Growth, and Investment Opportunity

Although the middle and low ends of the Panama real estate market did not blink during the recent economic slowdown the high end experienced a substantial correction. Prices dropped along Avenida Balboa and in expat retirements havens from Cero Azul to Boquete. Bank repossessed properties and others are still available for a fraction of their previous prices.

What is happening as Panama's economy mends itself and foreigners get their finances and credit in order again? The price of high end real estate in Panama is heading back up, as much as 35% in the last year. The high end of the market has a ways to go and local real estate experts are expecting another three to five years before prices reach a stable level. In the meantime add underpriced real estate to your list of Panama business opportunities.