Panama as Region's Fastest Growing EconomyPosted on 2017-05-11
Panama will regain its crown as Latin America’s fastest growing economy this year on a surge in trade through the newly-expanded canal and government investment in other infrastructure projects, the finance minister said.
Central American country will leapfrog the Dominican Republic, growing 5.8 percent in 2017, a year after the $5.3 billion expansion of the canal allowed the passage of larger ships, Dulcidio de la Guardia said in an interview in Buenos Aires.
“We are seeing an acceleration in the economy, product of the Panamanian economy being highly open and very tied to global growth,” de la Guardia said in an interview in Buenos Aires. “The global perspectives are much better this year than last year and that is generating a cascade effect in Panama, increasing the demand for Panamanian services.”
Government levies on the Panama Canal will surge 50 percent this year to $1.6 billion, about 7 percent of fiscal revenue, following the introduction of a new toll structure and a surge in tonnage shipped through the waterway, de la Guardia said. That money will help finance infrastructure projects, including a $1.86 billion metro line to be completed in 2019 and the $800 million expansion of the Tocumen International Airport.
President Donald Trump’s threats to impose more protectionist policies haven’t damped global trade, de la Guardia said. In fact, he saw trade picking up further.
“There has been a lot of rhetoric about the topic, but very few concrete policies,” De la Guardia said of Trump’s trade plans. “We think the cloud over global trade is going to dissipate and that should generate greater volumes of global trade going forward.”
Neither is the involvement of Brazil’s Odebrecht in infrastructure projects acting as a drag on the economy. While the company is accused of bribing officials across Latin America to win contracts, Panama has allowed it to continue with most of its projects.
The government is “following each project very closely” and “assuring that Odebrecht complies with its contract,” de la Guardia said. “First they have to finish what they have started, and secondly reach a deal with the Attorney General’s Office that satisfies the republic of Panama.”