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An economic summit of Latin American leaders just broke up in El Salvador. Leaders from all over Latin America discussed what they can collectively do in light of tough economic times ahead due to the global credit crisis. What is referred to as the Chavez block (Bloque Chavez) consisting of Venezuela, Cuba, Ecuador, Bolivia, and Nicaragua demanded that Latin America develop an alternative to the International Monetary Fund.

According the English language Latin American News Agency web site the summit was scheduled to discuss youth issues but leaders took advantage of getting together to discuss economic issues as well. As the web site notes the issues are interrelated as “[barely] a third of the 150 million young Ibero-Americans are employed and only 17 million of them have a reliable job.”

Latin America has made great strides in the last decade or more in reducing poverty. The middle class of Latin America has become more prosperous and their purchases have further stimulated economic growth from northern Mexico to Tierra del Fuego. What became an economic summit was meant originally to build on past success for the benefit of Latin American youth.

The credit crisis appears to affecting countries attending the economic summit differently. Oil producers such as Venezuela and Mexico will see their earnings drop while oil importers such as Panama will breathe a sigh of relief as gas prices enter the $2 a gallon range. Raw material exporters such as Chile will be hurt as global demand for mineral exports drop. Again Panama will benefit as the price of concrete and structural steel goes down.

It is no surprise to see Chavez, Ortega, and their crowd demand at the economic summit that Latin America set up its own bank to provide loans, over which Mr. Chavez, Ortega, and others would have more control.

As with almost all economic summits no deals were made as none were negotiated before the summit. No one really knows how long the global slow down will last. Latin America already has a number of free trade agreements in place that should help keep trade going during the current crisis. A number of countries, Panama especially, have had conservative banking laws and banks so that they never did sub prime loans and still have money to loan. Panama’s small business community will continue to benefit from recent changes in Panama’s credit laws.

Latin American leaders at the economic summit were concerned that the global slowdown will erase the gains they have made in fighting poverty by providing jobs and government services. With Venezuela losing oil revenues it is unlikely that the Chavez block will hold much sway over Latin American economic decisions.

Panama Investment and the Economic Crisis

As the worry at the economic summit indicates investment in parts of Latin America has run into problems of credit. Whether one makes an investment directly in a business or investment in commercial real estate a stable banking system and a function credit network are indicators of likely success.

With the summit a thing of the past Panama appears to be one of the global refuges from the economic storm. The construction boom is still going on. Small businesses are still active. Employment is still high.  The various Panama megaprojects such as the Panama Canal Expansion and interoceanic highway are moving forward.

Investment in real estate in Panama continues and commercial real estate investment in Panama may be the best bet for the short and long term. If you have an interest in commercial or residential real estate investments come to see us at ABPanama. We have over 23 years experience managing real estate portfolios and do business throughout Panama.