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Raúl Moreira, the president of the College of Economists in Panama spoke to La Prensa, Panama about the strong dollar and the cost of food.  According to Mr. Moreira the strong dollar will reduce the cost of imports, including food, to Panama. Further analysis of the strong dollar and it effects on Panama reveals that a stronger dollar will help the construction industry, hurt exports, and reduce raw material costs for the Panama Canal Expansion.

Since the Panamanian Balboa is tied one to one to the dollar Panama’s economy always feels the effects of large changes in the value of the dollar. There is the prospect of a global recession as a result of the credit crisis. Countries that rely upon exports to the USA have seen the value of their currencies drop as the US buys less. According to figures published in La Prensa, November 3, 2008, one euro now buys $1.27 verses $1.55 in May. A pound sterling buys $1.62 now versus $1.92 in May. A dollar also buys 30% more Mexican pesos than in May. Now replace “$” with “B/” and you have the improved exchange rates for the Balboa.

A Strong Dollar and Panama Inflation

In the last couple of years Panama has seen inflation unlike any in its history. The rising cost of food has been a burden on all, especially those living on the edge of poverty. Panama can be proud of its record of reducing poverty with more employment. Now with the prospect of lower, or no, inflation the recent risk that higher prices would erase the gains of Panama’s working class is diminished.

This is also good news for Panama investment. Panama has to import its steel and raw materials for cement, not to mention much else needed for construction. The specter of inflation choking off Panama’s construction boom was real. Lower construction costs will keep the crews working, the rasco cielos (sky scrapers) rising, and Panama’s work force employed.

Panama’s small business community, recently empowered by an improvement in Panama’s credit laws, can keep expanding. Those interested in Panama real estate investment, especially commercial real estate investment, can find renewed opportunities. A strong dollar and reduced construction costs is especially good news for North Americans still interested in a second home, residency, or retirement in Panama.

Whether one is interested in a targeted commercial real estate investment or investment in a house Boquete a strong dollar is good news. With the prospect of several years before the world extracts itself from its credit crisis the usual “flight to the dollar” will likely continue to the Balboa’s and Panama’s benefit.

There are still great deals in real estate investment in Panama. There has been a pause in the high end real estate market as credit problems sort themselves out in North America. So, this might be the best time to buy that condo on the Bay of Panama in Panama City. Likewise, property on the Caribbean Coast of Panama in Colon Province is still underpriced considering the likely flood of investment once the interoceanic highway connects Panama City and Colon.

If you are interested in Panama real estate investment come to see us at ABPanama. We can help you find the best deals now and we can help you find the best long term real estate investments for years to come. We have over 23 years experience managing real estate portfolios.