Country Report Panama November 2008

Summary

With national elections in May 2009 attention will increasingly focus on the campaign to determine the next government, which is due to take office in September 2009.
Rising crime rates, party infighting and a growing sense of uncertainty over the future economy have damaged the chances of the centre-left Partido Revolucionario Democratico (PRD) of winning a historic second term in 2009.
The Economist Intelligence Unit has revised down its growth forecast for 2009 to 4.9%, from 5.9%, following downward revisions to its forecast for world trade growth, which is now expected to contract for the first time in eight years in 2009, by 0.5%.
With oil and other commodity prices falling, growth slowing and domestic demand easing more sharply under our current forecast, we have revised down our inflation projections to 5.1% at end-2009, from 8.9%, and 3.2% at end-2010, from 8%.
With domestic demand and investment-related import spending slowing our forecast for the current-account deficit has been reduced to 6.5% of GDP in 2009, from 7.8%, and 7.1% of GDP in 2010, from 7.9%.

A ministerial scandal and an outbreak of party infighting have damaged the PRDs chances of being returned to power in 2009 under its presidential candidate, Balbina Herrera Arauz.
The message of change from the political status quo being promoted by Ricardo Martinelli of the small Cambio Democratico (CD) party is proving increasingly attractive among voters.
Despite the credit crisis spreading throughout the international capital markets, financing for the Canal expansion programme has been secured following commitments from one bilateral and four multilateral lending institutions.
Recently released figures show significant fall in poverty levels in recent years, as a result of rapid growth and job creation; government policy played a limited part in the reduction and economic slowdown threatens to unwind some of the progress.
There are growing signs of the impact being felt by sectors of the economy heavily exposed to the deterioration in external conditions.
The seizure in international capital markets and incipient global recession increase the risk that the construction sector will experience a bust, or sharp correction at best, in 2009-10.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60;47;15
NAICS Code: 52;48;23