December 20, 2020

Jose C. Corcione

It is very important for a country to grow through the sale of goods and services abroad. This generates employment and wealth for the inhabitants. It is achieved through the sale of products and services to the world. Panama has strengths that help bring those dollars from the world to the local economy and that are helping us counteract the COVID effect.

1) We have sectors that generate foreign currency (foreign dollars) and export the services that the world requires. We have the Canal, the ports, related services to supply or supply ships, shipyards and services to repair vessels, re-fueling services. This sector must be strengthened to become a spearhead. The Canal generates about $3 billion in revenue from export services in a $65 billion economy (GDP) on an ongoing basis and most of this enters Panama's economy. Likewise, we have a fiber optic channel that passes through Panama in a world where telecommunications are increasingly necessary, frequent and remunerated.

2) There are other sectors related to the previous one that also generate foreign currency for Panama. We have international license banks, lawyers who work on international trade issues and ship flagging.

3) The COPA company, which although affected by COVID, is a company that produced $2.5 billion in revenue before COVID, of which a good percentage is distributed in Panama. Apart from this, COPA manages to pass through the Tocumen Airport with some 16 million people in transit who generate around $10 per passenger in sales of products and services.

4) More than 65% of Panama's energy is produced from renewable sources such as water, wind, sun. This is important for the country's energy matrix. Reduces your dependence on hydrocarbons that can fluctuate in price. This is an important issue for companies that want to establish themselves in Panama as a Hub for their operations. 65% of our electrical matrix is ​​from renewable sources.

5) Our agricultural sector has improved a lot in the last 15 years. It has developed strengths that have allowed it to supply the local market with many products and export some of them. This autonomy is important for our positioning as a country and our autonomy. We highlight among them the Coffee, Shrimp, Banana and others. We cannot forget export fishing or mining.

6) Even with the moment we live in, we are in a country where access to credit is better than in 75% of the countries on the planet, where 25 and 30 year personal mortgages are available, where there is a large number of households that has its own housing, not rented, where the level of leverage of companies is comparable to developed economies. Where the banking system has good levels of liquidity for the market. and a trajectory that has demonstrated its sustainability.

7) The use of the dollar as legal tender, outside the United States, helps maintain a stable economy, less volatile than the Latin American counterpart and with less inflation. The fact of not having currency convertibility restrictions frees foreign investors from this concern. The example is how real estate increased its sales to foreign investors who decided to have a second home in Panama.

8) The development of a Hub for multinational companies, where companies will settle to provide services to other countries. Usually the costs of executives and other operating costs are dollars that come from abroad. Therefore, we are exporting services and helping the local economy grow.

9) The previous points make Panama more economically stable than many countries on the continent. Panama has been seen by American brothers as a land of opportunities. Where they are willing to come and invest, retire or simply go sightseeing. There are colonies of Colombians, Venezuelans, Canadians, Argentines and several others. Much of real estate development in the last 15 years has been the result of this influx.

In conclusion, although the GDP predictions for 2020 are for a -15% decrease, I estimate for the reasons stated above that 2021 will experience a better recovery than our Latin American neighbors.