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In remarks to the US Panama Business Council US Commerce Secretary Carlos M. Gutierrez called Panama an ally as well as a friend and important trading partner. As reported on the International Trade Group’s Export Guide web site, October 28, 2008, Gutierrez talked about trade and investment between the two countries remarking on Panama’s growth rate. Gutierrez promoted the pending US – Panama Trade Promotion Agreement.

The free trade agreement, “Panama Trade Promotion Agreement” between Panama and the USA is stuck in the US congress. Secretary Gutierrez, in his talk, made the point that a ratified agreement would benefit both countries.

The USA is Panama’s number one export market receiving 36 % of Panama’s exported goods. Likewise the USA has 30 % of Panama’s import market. Bilateral trade amounted to $4.1 Billion USD in 2007. Gutierrez stated that a ratified free trade agreement would further enhance trade between the countries.

It was the Commerce secretary’s opinion that Panama’s already rapidly growing economy (11% last year) would be further improved by expanded trade with the USA. The agreement, according to Gutierrez, would attract even more foreign investment to Panama creating jobs and raising living standards. U.S. direct foreign investment in Panama reached $6.2 Billion USD in 2007 which was up from $4.7 Billion USD in 2006.

Panama Canal Expansion and Free Trade

About 5% of world trade and 15% of all US trade passes through the Panama Canal. Nearly 70% of cargo and 50% of vessels that pass through the Panama Canal each year have either a US origin or US destination according to the Secretary. A doubling of Panama Canal capacity with completion of the Panama Canal expansion will increase canal traffic and tolls. Free Trade agreements, by increasing trade between nations, tend to create wealth. For Panama this is a double benefit as Panama benefits from more jobs and cheaper imports but also from the increased shipping traffic generated by more trade.

Free Trade, Worldwide Credit Crunch, Panama Investment, Panama Growth and Prosperity

In a time of global financial difficulty Panama has a unique set of opportunities. As the demand for raw materials drops world wide Panama’s construction boom will benefit from cheaper steel, cement, copper, and other materials. As the cost of oil goes down Panama imports will become cheaper. All of this will help reduce Panama’s inflation which has served to offset the effects of more jobs in Panama. Lower expenses may well preserve the strength on Panama’s construction boom through this period of world wide financial concerns. Panama’s conservative banks did not take on junk mortgages so they still have money to lend and we can expect the many construction projects in Panama to continue generating the jobs and salaries that have helped alleviate poverty in Panama.

Panama Real Estate Investment

Panama continues to provide opportunities for real estate investment. The likelihood of increased canal traffic, a continued construction boom, and a steadily growing small business community in Panama supported by recent credit law improvements are the underpinning for solid growth. Investment in Panama real estate for offices, warehouses, retail space will tie you into Panama’s economic growth. To the extent that real estate prices may level off in the near term due to foreign developers being short of cash this only provides another set of real estate investment opportunities for those ready to take over projects in the works.

If you are interested in Panama real estate investment, contact us at ABPanama. We have over 23 years experience managing real estate portfolios and would love to help you target in successful real estate investment in Panama.