What has happened in the months following the “Panama Papers” scandal broke? The way a country responds to bad PR is often a great indicator of its sustainability, and so far Panama seems to have the backbone to recover, yet is still reeling from the punch.
For starters, there’s been a spate of good news recently.
The biggest news of course is that the newly expanded Panama Canal is finally open and toll records have been consistently smashed as bigger ships can now pass through the Canal, paying upwards of $800,000 per boat. That type of new toll revenue adds up quickly.
JP Morgan advised their clients on a strong “buy” of the $300 million bond offering last month, citing “Everything else that has been sustaining growth in the country is very much there, and is there to stay. If the bonds have underperformed as a consequence of some risk aversion related to the Panama Papers scandal, then you should be buying Panama.”
More good news also came from The World Bank in their 2016 Global Economic Prospects Report, predicting Panama to be the fastest growing economy in all of Latin America for the next five years, beating the likes of Colombia, Brazil, and Chile. (PS, this is the WORLD BANK who said this, not some local newspaper or charlatan real estate guy ahemm).
The Varela administration in 2016 has officially put out to bid more than $1 Billion dollars of public works projects, including an expansion of the existing Metro Line 1, massive water treatment projects in the interior of the country, as well as a total redesign of the new Convention Center on the Amador Causeway. Healthy debt to GDP levels mean that the government has plenty of money to continue financing large projects which keep people working and SHOULD keep the country’s economy humming.
On the surface, things look pretty rosy and at the end of the day these types of headlines are reassuring, but locals still haven’t bought in to a full recovery after the Papers (and the Wakid scandal). Many Panamanian business owners are seeing growth rates in the single digits this year, compared to the double digit smorgasborg that was the Martinelli days. That’s sobering but it’s also a bit closer to the reality of the rest of the world, which is that “the funny money days are over.”
I expect the local economy will by the first quarter of next year start seeing the trickle down benefits from the Canal, money flowing from awarded government projects, and an overall pick-up in consumer sentiment. While indicators like new car sales, first time home loans, and unemployment all show positive gains, it’s still a bit ho-hum on the streets here, with locals complaining that the new Varela administration “isn’t doing anything.” I guess those are the same guys who were getting the juicy Martinelli contracts that have since dried up.
On we march!