economy

Growth expected to slow

Experts disagree on how much the global recession will impact Panama.

Iván Uribe/la prensa

still going: Consumer spending has not appeared to slow, an indication the economy remains strong.1141624

Experts are divided on how much the global economic crisis will impact Panama. While some argue that Panama will not be greatly impacted by the crisis, others claim that the backlash will be serious. Economist Adolfo Quintero said that the country will not go into a recession, but will suffer a slowdown. According to his estimates, growth for 2009 will be between 7.5 percent and 8.7 percent. Others, such as analysts from the consulting firm Deloitte, predict growth will be about 5 percent. The Ministry of Economy and Finance estimates that the gross domestic product will grow between 7 percent and 7.5 percent, according to projections in the government's 2009 budget. In any case, this growth will be less than 11.5 percent in 2007 and the estimated 9 percent in 2008.

Sustaining this level of economic activity “will depend on the strength of domestic investment and investor confidence,” Quintero said, adding that banks will play an important role in that they should not be too strict in lending rules. “I've been in shopping malls and there is no crisis. On the contrary, people are consuming at their highest levels,” said Jorge Quintero, director of the Consumer Protection Authority. Others, however, believe that the effect of the global recession will eventually hit home.

“As the world is interdependent, it will be inevitable that the crisis will hit us,” said financial adviser José Canto. Several economists agreed that the Colon Free Zone, the Canal, exporters, banks and the building sector will be most affected. Similarly, economic adviser Javier Arias stressed that many foreigners have postponed retirement in Panama because their savings have been depleted by the drop in stock prices globally.

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