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Emerging Economy: Panama Joanna Jackoby

Emerging Economy: Panama Joanna Jackoby. Introduction. Panama fastest growing country in Latin America Risks stem mainly from unsettled external environment Further reforms needed to transition to sustainable, inclusive growth Panama Canal Expansion – unique opportunity. Articles Reviewed.

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Emerging Economy: Panama Joanna Jackoby

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  1. Emerging Economy: PanamaJoanna Jackoby

  2. Introduction • Panama fastest growing country in Latin America • Risks stem mainly from unsettled external environment • Further reforms needed to transition to sustainable, inclusive growth • Panama Canal Expansion – unique opportunity

  3. Articles Reviewed • “Panama: Economy to Maintain Fast Pace,” Oxford Analytica, Oct. 15, 2013 • “Panama: Growth to Remain Buoyant,” International Monetary Fund, Mar. 28, 2013 • “Panama’s $5 Billion Canal Upgrade Jolts U.S. Ports From California to New Jersey” by Eric Sabo, Bloomberg News, Jan. 30, 2014 • Additional Sources • 2013 Legatum Prosperity Index • 2013-2014 Global Competitiveness Report, World Economic Forum

  4. Economic Growth • Gross Domestic Product • Average annual growth rates 8.5% over last five years; $36 billion in 2013 • More than doubled over past decade • Moody’s high rating for emerging markets; on par with Brazil and Peru • Ranks sixth among emerging markets (Bloomberg Markets)

  5. Growth Factors • Rise in public and private investment • Tourism; reverted properties • Major infrastructure spending • Hospitals and roads throughout; subway for Panama City • Free trade agreements • US, EU and Canada • Panama Canal expansion • Colon Free Zone • Expansion of domestic services • Future copper mining project

  6. Challenges • External Shocks • U.S. business cycle • International trade though Panama Canal • Inequality • “Duality” in economy; externally connected vs. not • Human Capital • Scarcity of skilled workers • Corruption

  7. Reform Initiatives • Debt consolidation • Sovereign Wealth Fund • Enhance resilience to shocks over medium-term • Increased tax revenue • To sustain social and capital spending • Prioritization of education • Modernize curricula and enhance technology

  8. Legatum Prosperity Index • Overall ranking: 40 (total 142) • Americas: 6 (total 24) • Latin America and Caribbean: 4 (behind Uruguay, Costa Rica, and Chile) • Panama moved up 5 places in overall Prosperity to 40th between 2009 and 2013. • Economy sub-index up 21 places to 31st due to increases in gross domestic savings and high-tech exports • The Social Capital sub-index down by 11 places to 41st due to decrease in perception of social support and marriage rates Legatum

  9. Global Competitiveness (WEF) • Data from World Economic Forum (WEF) 2013-2014 • Rank out of 148 • Score 1 – 7 • Panama in transition from Efficiency driven to Innovation driven • Most problematic for business • Undereducated workforce • Inefficient government bureacracy • Corruption

  10. Panama Canal Expansion • Under construction since 2007; cost $5.25 billion • New locks • Deeper channel • Larger ships • Greater cargo capacity • Immunity from Corruption

  11. Impact on Int’l Shipping

  12. Impact on the United States • US East Coast Port upgrades • Bayonne Bridge, NY-NJ • Savannah, GA port • Port of Miami • LNG from Lake Charles, LA • Freeport, Bahamas transshipment • Negative for US West Coast ports “As energy production throughout the Americas grows, Panama is going to play a critical role in bridging energy supplies in the Atlantic with a growing demand in the Pacific.” – Joe Biden

  13. The EndAny Questions?

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