Panama Canal Widening in Progress
Panama’s
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Panama’s
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Panama - An article in The
Statesman, reviewing Panama’s boom years,
says the real estate market might be heading
for a sharp downturn. It reflects stories
carried recently in the Panama Star.
The story quotes Matt Landau, a New Jersey
native and Panama City investment
consultant, as saying that real estate sales
have declined precipitously in recent
months, especially among the
U.S. and European buyers who largely fueled
the boom.
"When I first got here (about four years
ago), people were buying (properties) for
$200,000 and then flipping them for double
or more in six to 12 months," he said. "That
was happening even up to a year and a half
ago."
Now, Landau said, Panama City is bracing for
a glut of high-priced condominiums.
And as global trade is pummeled by the
recession, Panama Canal officials expect the
number of cargo ships passing through the
waterway — and the tolls they pay to the
Panamanian government — to fall almost 6
percent this year.
Even there, Panama has an ace up its sleeve
in the form of a $5.2 billion Panama Canal
expansion, which will widen the canal's
locks to allow larger ships to pass through.
Although recession wasn't on the minds of
Panamanian voters when they approved the
expansion in 2006, officials see the mega
project as a perfectly timed stimulus that
will directly create nearly 7,000 jobs in a
country of 3 million and spark the creation
of thousands of secondary jobs, just as the
economy begins to sag.
"It's as if we are increasing public sector
spending by 35 to 40 percent," Alexander
said. "Today it works as a fiscal stimulus."
Percentage wise, the canal expansion dwarfs
any stimulus project the United States is
planning. The project represents nearly a
quarter of Panama's $23 billion gross
domestic product.
By comparison, the $787 billion stimulus
package in the U.S. represents about 5
percent of America's $14 trillion gross
domestic product.
Counter-narcotics officials have long
suspected that Panama's boom has also been
aided by an influx of money from criminal
organizations.
According to the US State Department's 2008
International Narcotics Control Strategy
Report, the country's construction and
offshore banking sectors are particularly
susceptible to money laundering.
But Panama's economy has been helped by a
stable and peaceful political scene, which
the nation has enjoyed since the 1989 ouster
of dictator Manuel Noriega.
When Noriega was captured by US troops,
Panama's economy was in shambles, paralyzed
by an economic embargo of Noriega's regime.
Successive democratically elected
administrations have focused on economic
recovery, enacting reforms and privatizing
sectors such as telecommunications and
electricity.
But some critics say Panama's spectacular
economic growth in the past five years has
left out the majority of its people.
"The problem is that the growth has stayed
in a few hands," said Rolando Gordon, a
University of Panama economics professor.
"The economic boom hasn't been able to
resolve any of the great social problems of
the country."
Gordon said government statistics obscure
the fact that even as the country's economy
exploded, the percentage of Panamanians
laboring precariously in the nation's
informal sector — doing things such as
selling fruit at intersections — has risen
from 33 percent in 2001 to 44 percent today.
Gordon added that public schools are
underfinanced, and access to drinking water
remains
problematic for many Panamanians. At the
same time, the price of basic foodstuffs has
increased.
"This boom we're having is tremendous," taxi
driver Jose Cano said. "But for the poor,
the humble, we aren't seeing the boom. The
price of food is going up. I have my own
taxi, so I'm doing pretty well, but there
are a lot of people who are recycling cans
and stealing scrap metal."
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