Panama Sees $1.1 Billion in Foreign Direct Investment in First Six Months of 2008

By Marianela Palacios Ramsbott for La Prensa - Foreign Direct Investment (FDI) entering Panama in the first semester of 2008 reached $1.1 billion dollars, representing an increase of 32.8% when compared to the same period of 2007, according to a report published by the General Comptroller of the Republic. The increases are primarily due to investments by banks and utilities of general license operating in the country. Other areas that have attracted great volumes of foreign investment during the past year are construction, the expansions of port facilities, the entrance of new cell telephone companies into the Panamanian market, as well as projects to increase the generation of electricity. And, according to the economic consulting firm Indesa, everything seems to indicate the flow of FDI will continue to grow strongly in the mid term, unless a strong recession in the United States and the global economic deceleration contracts international investments. “In order to expand the installed electrical generation capacity of 993 megawatts, as is predicted, will require an additional investment of $1.2 billion dollars in hydroelectric facilities over the next five years," said Indesa. And “for the period 2010-2011, $2.8 billion dollars or 53% of the total cost of the expansion of the Panama Canal will already have been invested." Between 2005 and 2007, foreign direct investment represented an average of 17.5% of the gross domestic product. But, according to estimations from Indesa, that indicator will jump to 52.3% in 2011. On the other hand, the United Nations Conference on Trade and Development (UNCTAD) anticipated recently that, in spite of the crisis in the United States, foreign direct investment in Latin America will continue growing this year and that Panama will not be the exception of that rule.

Editor's Comment: These are the kinds of numbers that cause economists to lose control of their bodily functions. Did you see the line about the expectation of seeing a level of foreign direct investment equal to 52% of the GDP in 2011? I mean, holy friggin' cow. Money is just pouring into this place in buckets. History will see this period as the golden times of an unprecedented expansion in Panama's relatively tiny national economy. Panama has had the fasting growing economy in Latin America for two years running. Sure, the crash in the US is going to have an impact, especially with regards to access to credit for large and ambitious construction projects, but overall I still think foreign investors will see Panama as a relative safe haven with attractive potentials for significant near to mid-term growth.

source: Panama-Guide.com