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Panama, here represented by capital Panama City, has become a Latin American business champion. (Photo: ATP)
Wednesday, April 2, 2014
Special Reports

Panama: Latin America Champion


Latin America leader in transport infrastructure, wireless and Asia imports and a growing magnet for multinationals.

BY LATINVEX STAFF

Panama – the host of this year’s World Economic Forum Latin America – has become a regional champion when it comes to business.

“Panama has come to stand out as one of the best places to establish business operations for multinational companies,” President Ricardo Martinelli said in an article in connection with the WEF event.

An increasing number of multinationals have set up their Latin American headquarters in Panama, including Adidas, Caterpillar (training center), Maersk, Mars and Nestle. The Latin America head of security giant G4S is based in Panama.

They have been attracted by a combination of factors, including the country’s central location between Central and South America, an attractive business environment and a highly-efficient infrastructure in technology and transport.

It has Latin America’s second-most competitive economy (behind Chile), according to the Global Competitiveness Index from WEF and ranks fourth in Latin America on the World Bank’s Doing Business ranking.

Meanwhile, Panama has Latin America’s best transport infrastructure, according to a Latinvex ranking of 19 countries based on 17 key factors.

Part of the reason is Tocumen, Panama City’s international airport, which many business people consider the most efficient in Latin America. It boasts an extensive offer of international flight connections that is increasingly rivaling Miami.

However, Panama also boasts a strong shipping infrastructure, with major port operations on each side of the Panama Canal. Panama’s top container port Colon handles more traffic each year than Brazil’s top port Santos.

And the canal, which turns 100 years this year, is undergoing a historic, multi-billion expansion which will enable it to handle larger ships. While the expansion has been marred by some disputes and delays, experts say the final expansion will clearly benefit Panama’s economy.

In technology Panama has also become a champion, having Latin America’s highest wireless telephony penetration rate, according to a Latinvex analysis of data from the International Telecommunications Union (ITU). In 2012 it reached a whopping 187 percent, one of the highest in the world and significantly higher than the Latin American average of 109 percent. It also has Latin America’s 5th-highest PC penetration (27.2 percent) 7th-highest Internet penetration rate (45 percent), according to data from Computer Industry Almanac and the ITU analyzed by Latinvex.

In tourism, it leads Latin America when it comes to receipts per visitors, according to a Latinvex analysis of data from the World Tourism Organization. It also has Latin America’s second-highest ratio of receipts as a percent of GDP.

TRADE: HIGH IMPORTS, LOW EXPORTS

It is also among the champions in Latin American trade. It is the largest Latin American market for both Japan and Singapore and the third-largest market for South Korea. However, much of those exports are then re-exported to the rest of Latin America, using Panama as a transshipment hub. Panama also posted Latin America’s strongest real increase in two-way trade with Singapore in 2012, according to a Latinvex analysis of data from the International Monetary Fund (IMF).

However, Panama has a long way to go in terms of exports, which only account for 2.2 percent of its GDP, according to a Latinvex analysis. That’s the lowest rate in all of Latin America.

FDI AND GDP

Thanks to the growing presence of multinationals as well as major purchases of Panama assets, it now has Latin America’s second-highest ratio of foreign direct investment as a percent of GDP, according to a Latinvex analysis.

The growing imports, tourism and FDI, in turn, are helping to boost the economy. Panama is expected to have Latin America’s highest economic growth rate this year, according to a Latinvex analysis of estimates from the IMF. 

As a result of recent economic growth, Panama last year became the second-richest country in Latin America after Chile, according to another Latinvex analysis of data from the IMF 


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