Nearshore Americas

Panama’s Economy Projected to Grow 8.5 Percent

Source: Reuters

Panama’s gross domestic product for the third quarter of 2011 rose 10.4 percent from a year earlier, the government statistics agency reported on Thursday.

Driven by heavy government infrastructure spending — including the $5.25 billion expansion of the Panama Canal — Panama’s diverse services-based economy has been boosted by private construction, foreign investment and international trade through the canal and ports.

Panama’s roaring economy could expand by around 10 percent in 2011 and remain among Latin America’s top performers in 2012, according to government projections.

The International Monetary Fund expects Panama’s economic expansion to exceed 8.5 percent growth this year but slowing slightly in 2012.

The Central American country’s Finance Minister, Frank De Lima, recently told Reuters he expects the economy to expand by 7.5 percent next year and called the projection “conservative.”

Heading into more global economic turmoil in 2012, Panama is considered to be on even stronger footing that it was in 2009, when GDP growth dipped to 3.9 percent from 10.1 percent a year earlier.

“We don’t expect the downturn in 2012 to be as sharp as it was in 2009 (for Panama),” said Casey Reckman, an analyst at Credit Suisse, which in a recent report pointed to continued strong domestic demand — driven by public investment and credit growth — as the main buffer for Panama’s economy in a weak global growth environment.

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