Raise your hat to Panama – as the tiny Latin American country that has one of the most robust and fastest growing economies in the region.
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Not only does the nation have the famous canal, but it’s the hub the region revolves around as the link between the Pacific and the Atlantic and North and South America.
Successive governments have capitalised on their nation’s geography to build Panama into the services and logistics hub of the region.
Backing these grand aims is a thriving economy that has seen GDP double since the global credit crisis, according to the latest economic review by the UK’s Foreign and Commonwealth Office (FCO).
Financial and business hub
Growth in 2013 stood at 8.4%. That’s the second highest rate in Latin America, and GDP has averaged 8.7% for at least 10 years.
This is backed by low unemployment, low inflation and a large number of wealthy spenders with large disposable incomes.
“British companies and investors should judge Panama by the opportunities it offers as a gateway to the region rather than the compact internal market. Panama is outward looking and investors and firms who want to take advantage of the nation’s economic growth need to understand this,” said an FCO spokesman.
The FCO review points out that a $5.2 billion expansion of the Panama Canal will see 8% of world trade pass through the country as the focus of 144 maritime trade and passenger routes.
This financial input has seen Panama develop the two largest ports in Latin America at either end of the canal.
Importantly, Panama is growing in stature as the region’s leading financial hub.
As a thriving finance centre, Panama draws on the increasing number of multinationals attracted to the nation by the benefits of the canal.
Panama is a fully compliant Foreign Account Compliance Tax Act (FATCA) country with an inter-governmental agreement with the USA that eases administration for more than 90 international banks.
A benign tax regime for multinationals has also lured more than 100 companies to base their regional headquarters in Panama City and beyond.
Pegging the currency with the US dollar also has foreign exchange advantages and links to European money markets open up bond markets for investors.
“Business is not all that Panama is about,” said the FCO spokesman. “Panama is also drawing tourists from Latin America and competing with Miami for the crown of king of the Latinos. One benefit is Latin Americans do not need to go through the arduous US visa process to visit.”
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