national

Economy slowing down

The consulting firm Deloitte has lowered its projection for the growth of the Panamanian economy for this year. In January, the firm predicted the country's growth to be 9 percent, but now says it will be 7.5 percent.

“In any case, 7.5 percent is a very favorable level of growth, and will remain among the highest in the region,” said Deloitte partner Domingo Latorraca.

Panama's economy grew 11.2 percent in 2007, one of the fastest growth rates in the world. But the economy has slowed somewhat this year, growing by 8.4 percent in the first quarter.

“The slowdown should not be alarming,” Latorraca said. “It is typical of the economic cycle, and it appears that the country is facing the global crisis far more successfully than some had expected.”

What is worrying is inflation. According to the latest report by the Contraloría General de la República, the consumer price index increased 9.6 percent from mid-2007 to mid-2008. Analysts predict that the country will experience inflation rates greater than 10 percent this year.

“Despite the decline in oil prices, we continue to believe that inflation will reach double digits. The main reason for the escalation of prices is that food prices have not stopped their ascent,” said Ernesto Bazán, manager of the rating firm Equilibrium, which is associated with Moody's Investor Services.

Panama has not had a problem with inflation since 1981.