Panama: “Latin America’s Strategic Link With The Global Economy”:

Which are the safest countries in Latin America for multinational executives? Top of the list compiled by “FTI Consulting Ibero-America” on behalf of the Latin Business Chronicle is Costa Rica, followed by Chile and Uruguay. The FTI study has also concluded that Haiti, Venezuela and Honduras are currently the most dangerous places to live in the region and has classified Mexico as a “high insecurity” location for employees of foreign companies. The doubling of Venezuela’s crime rate between 1999 – 2012 indeed emerged as one of the key concerns of the voters during the country’s presidential election campaign. In an article on 3rd October, The Guardian’s correspondent in Caracas, Rory Carroll, depicted the city as having become “deadlier than Baghdad” – despite the decrease in both poverty levels and unemployment (from 13% – 8%) since 1999. Lack of security, wrote Carroll, “ is one reason why so many young Venezuelans are emigrating, giving Caracas the melancholy nickname ‘City Of Farewells’”.

Where do they go? Many of course to Miami – but Panama now offers an increasingly attractive alternative. The New York Times (NYT) recently described this country with a population of around 3.5 million as “the thin bridge between North and South America” and a “geographic & financial crossroads”, as well as pointing out that since the removal of the military ruler, Manuel Antonio Noriega, by US forces almost 23 years ago, Panama has enjoyed “ an era of political stability and financial investment that has made it one of the fastest-growing economies in the Western Hemisphere.” The NYT also quoted the opinion of a Venezuelan lawyer, Sergio Yurman, who has moved there to set up his own company, that Panama is “a third-world country on track to the first world”.

It was evident from the lecture delivered by Panama’s Deputy Minister of Foreign Affairs, HE Francisco Alvarez de Soto at Canning House in Belgrave Square on 3rd October, that he considers his country has already moved on well beyond the “third world” stage. After introductory speeches by Lord Brennan, President of Canning House and Ana Irene Delgado, the Panamanian Ambassador in London, Sr. Alvarez embarked on an analysis of his country’s “greatest asset – it’s privileged geographical position” and also concurred with the NYT view of the strength of Panama’s economy. In 2010, he pointed out, his country experienced a 7.5% growth rate and in 2011 this improved further to 10.8%. These figures coincide with data issued by the United Nation’s “Economic Commission For Latin America and the Caribbean” (ECLAC), which anticipates that Panama’s GDP will decline slightly to 9.5% this year and to 7.0% in 2013 – still significantly higher than in any other Latin American nation. ECLAC predicts that, although Argentina’s GDP this year will be only 2% (compared to 8.9% in 2011) but up again to 3.5% in 2013 and Brazil’s just 1.6% (2.7% in 2011, improving to 4% in 2013), most of their neighbouring countries are doing perceptibly better: Peru 5.9% (6.9% in 2011), Bolivia 5% (5.2% in 2011), Chile 5% (6.% in 2011), Colombia 4.5% (5.9% in 2011),Venezuela 5% (up from 4.2% in 2011), Mexico 4% (up from 3.9% in 2011). Paraguay’s GDP, however, “will contract by 2% this year owing to the drastic fall in soybean production as a result of climate factors” – but will recover to 5% in 2013. The whole region, says ECLAC, has been adversely affected by “deteriorating global growth prospects, the euro zone crisis, the unsteady economic upturn in the US and evidence of a cooling of the Chinese economy”.

The one exception to this trend appears to be Panama. Sr. Alvarez provided a plethora of facts and figures to support his optimism for his country’s progress: The special economic zones (such as the “Colon Free Zone”) “generated commercial transactions worth $29 billion in 2011”. Tocumen International Airport offers flights to “68 destinations in 36 countries”. The country’s “jewel of the crown”, the Panama Canal, is a “gateway for 5% of world trade and serves more than 144 maritime routes”. (Sr. Alvarez was not worried about the possible threat from Nicaragua’s proposal to construct a rival 200 kilometre canal at an estimated cost of $30 billion. “Let the best one win” was his response). Panama, he declared, is “one of the safest countries in Latin America” (along with those named by FTI Consulting).  He believed, moreover, that its economic, financial and trade development had earned it the title of the “Singapore of Latin America” and its “tradition as a sponsor for the peaceful resolution of international conflicts” (for instance, its proposal to host the UN’s “Logistic Centre for Humanitarian Assistance”) could turn into reality its aim to become “the Geneva of the Americas”.

Panama is Central America’s “main trading partner with the European Union”(EU): In 2011, 23 EU nations sent 1867 vessels through the Canal, generating revenue of $919 million. As part of the “Pacific Rim”, the country is “turning its gaze towards the large Asian economies”, such as China and South Korea. As a result of Panama’s admission to ALADI  (Asociacion Latinoamericana de Integracion) on 10th May 2012, South American countries “will benefit from a logistic platform of privileged geography with the Panama Canal as its main axis”. Panama is one of only seven Latin American countries (the others are: Colombia, Brazil, Peru, Mexico, Uruguay and Chile) which maintain an “investment grade” with the world’s three main rating agencies (Fitch, Standard & Poors, Moodys). Sr Alvarez clearly wanted his audience to be aware that in 2011 Panama was removed from the OECD’s (Organization For Economic Co-Operation and Development) list of countries considered to be “tax havens”. It is committed to exporting its international, financial, commercial and banking services to the world – but its tax system is definitely not (he repeated emphatically) designed to promote or facilitate in any way, tax evasion by tax payers in other countries.







Filed under: General, Politics | Posted on October 9th, 2012 by Colin D Gordon

Comments are closed.


Recent Posts


Copyright © 2019 Colin D Gordon. All rights reserved.