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Panama’s Economy Keeps Building on Momentum

Panama’s Economy Keeps Building on Momentum

As we reported in our previous newsletters, Panama’s economy has been building momentum. With growth up for the first month of the year at 4.6% (year-on-year) coming mostly from trade-related activities (transportation, storage, communications, and cargo shipments passing through the Canal and ports), the 5.6% expected growth for 2018 should now be within reach.

Not surprising, the Canal is expecting a boost in shipments this year, up 7% year-on-year at 431 million tons for the fiscal year ending September. Interestingly, the growth should come from recovering raw material prices and rising demand in emerging markets. So, the Canal is doubling down on both trends by promoting soy and corn coming in from Brazil (from Mato Grosso’s newly expanded ports) and bound for Asia via Panamex cargo ships.

On other Panama City news, the Amador Convention Center is now 68% complete and expected for delivery by the end of the year to the tune of $194 million. US-based SMG, which manages 77 convention centers worldwide, was awarded the 5-year management, operation and maintenance contract. And they seem to know what they’re doing — the goal for the first year will be to host 100 events, which should bring in over $18 million. SMG expects to market the space to US, Mexican and European companies and has plans to do so by forging new partnerships with stakeholders across the tourism industry — hotels, airlines, you name it, they’re in it. It seems that the industry is ready for it, too, and they all agree that Amador could be a gamechanger for tourism and a boost for those lagging hotel room occupancy rates. Remember, it’ll have capacity for 20,000 people over a total space of 58,000m2, of which 30,000m2 will be designated for events.

On infrastructure news, Alstom has shipped the first Metropolis trains for Metro Line 2, ready to start operating in 2019 over the 21km elevated tracks and 16 stations linking San Miguelito and Nuevo Tocumen. And, a pre-feasibility study is out for Lines 2A, 4 and 5, including future demand projections through 2040 for the city.

In banking, a bill was put forward by the Varela administration to modernize the regulation of financial products and promote financial innovation. Coming right on the back of news that credit only expanded by 1.4% last year, clearly much still needs to be done in Panama, but this bill is a big step in the right direction. The proposal includes regulating new financial products, defines the operation of crowdfunding platforms (CEFICO), and creates new legal vehicles such as family offices that can administer financing and insurance products. The bill also proposes launching a sandbox regulatory framework to support innovation, which will be spearheaded by the City of Knowledge.

And, last but not least, our newsletter would not be complete without some China news. This time, a Beijing-based company is the latest to move into the Colón Free Zone. Welcome Temaks, a clothes and sports footear manufacturer, which has been dominating European markets for over two decades and is now looking to use the CFZ as a launchpad to start distributing gear to the Caribbean and Latin America.

 

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