Embassy of India
Panama
***
No.PAN/201/1/2009 July 15, 2009
Economic & Commercial Report – June 2009
Executive Summary
1. Cabinet approving additional funding for the second phase of the
Sanitation Project of the Panama City and the Bay of Panama;
Announcement of new fuel prices by the Panama's National Energy
Secretary; Presentation of a report on the status of public finances for
the new government; Coming into effect of Fiscal Responsibility Law;
Signing of a MoU between Philadelphia Regional Port Authority and the
Panama Canal Authority for increasing all-water container traffic from
Asia to Philadelphia through the canal; Receiving of “Best International
Project” by the Panama Canal Expansion Program; Coming into effect of
FTA between Panama and Guatemala; are the important events during
June 2009.
PANAMA
Economy & Trade
2. According to Office of Comptroller General, Panama's economy
grew 2.5% in the first quarter of 2009. This growth rate is the lowest that
has been registered since the second quarter of 2003 and reflects a
strong deceleration of the Panamanian economy. As per the National
Center for Competitiveness of the Panamanian Association of Business
Executives, the deceleration follows the worst global recession in the last
70 years that has created in the country a drop in exports, a slowing
down of lending, decreases in domestic and foreign private investments -
three of the main factors driving the economy. The World Bank [WB],
which constantly monitors the performance of the economy of Panama,
is evaluating the possibility of revising downwards its growth forecast
from 4% - 5% to 3% for 2009. In its report titled "Indicators of Good
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Governance", WB placed Panama as the second country in Latin
America with best scores on "Regulatory Quality" [a sub heading which
assesses the ability of governments to dictate regulations that encourage the private
sector].
3. During January-June 2009, the trade transactions in the Colon
Free Zone totaled US$8067.7 million [imports US$3919.2 million & re-exports
US$4148.5 million], registering a modest growth of 1.1% over the same
period of 2008.
4. Panama's consumer prices fell by 0.30% in May 2009 compared to
April 2009, placing its annual inflation rate at 2.5%. Panama‟s inflation in
2008 was 8.7% mainly driven by high oil prices and strong consumer
demand due to robust economic growth. As per the data of the Ministry
of Economy and Finance, the Basic Family Food Basket [CBFA] fell
2.6% in May to US$265.33 from US$272.49 in April 2009.
5. According to the Ministry of Social Development, the poverty in
Panama was reduced from 37.3% in 1997 to 32.4% in 2008.
6. As per the Ministry of Economy and Finance, the Cabinet approved
additional funding of US$149.14 million for the second phase of the
Sanitation Project of the Panama City and the Bay of Panama to cover
part of the construction cost of the sewage plant and the final routing of
these wastes.
7. According to Office of Comptroller General, Panama attracted
US$387 million in Foreign Direct Investment [FDI] in the first quarter of
2009, which is 37% less over the same period of 2008 when it was
US$175 million. The contraction bears a strong relationship to the sharp drop-off
of income reinvested in the country by banks, as well as lower rates of investment by
users of the Colon Free Zone and other companies. If these tendencies continue
throughout the remainder of the year, the country could close out 2009 with a level of
Foreign Direct Investment much lower than that registered in the past three years,
deepening the present deceleration of the Panamanian economy. As per the
estimates of the Indesa [consulting firm], Panama needs to attract about
US$2 billion & US$2.5 billion in FDI in 2009 & 2010 respectively in order
to be able to successfully offset the effects of the global recession for the
Panamanian economy to continue to grow at a good rate. These foreign
investments can be obtained through the expansion of the Panama Canal, as well as
the execution of harbor and hydroelectric projects, among others.
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8. Panama's National Energy Secretary announced the new prices for
fuel. As of 6th June 2009, the new maximum price for 91 Octane gas will
rise 15 cents to US$2.79 per gallon, while 95 octane gas will go up 14
cents per gallon to US$2.94, light diesel will go up 13 cents per gallon to
US$2.21.
9. President Martin Torrijos and the Minister of Economy and Finance
Hector Alexander presented on 24th June 2009 a report to the Public
Finance Committee of the National Assembly on the status of public
finances for the new government.
10. The Fiscal Responsibility Law which came into effect from 27th
June 2009 allows the temporary suspension of the limits of fiscal deficit
of the non-financial public sector, with respect to the GDP. The reform
set at 2.5% the ceiling on the public sector deficit for 2009 and it is not
eligible to be reduced progressively until it reaches 1% in 2012.
11. The increase in fees, registration of people [who are self-employed]
and increasing employment have been the key to rising incomes of the
Social Security Fund as it has succeeded in expanding by 35.6% or
US$156.7 million in the first quarter of 2009 over the same period of
2008.
12. According to Camille Bennett, local Station Manager of the
Panama-based Copa Airlines [which entered the Trinidad and Tobago market a
little over a year ago] has increased the number of flights it operates out of
the country on a weekly basis from four to six. From Panama, passengers
can fly directly to Miami, Orlando and Washington DC in the US; Mexico, Costa Rica,
Guatemala, El Salvador, Nicaragua and Honduras in Central America; as well as
Aruba, Puerto Rico, Jamaica, Haiti, the Dominican Republic and Cuba in the
Caribbean; and Colombia, Venezuela, Ecuador, Peru, Brazil, Chile, Argentina, Bolivia
and Uruguay in South America.
13. The Latin American Wind Energy Association [LAWEA] will be
organizing the second Latin American-International Wind Power
Conference and Exhibition „WIND EXPO Panama 2009‟ in Panama from
2–4 September 2009. The WIND EXPO was held in the city of
Guadalajara [Mexico] in 2008. The main objectives of WIND EXPO 2009
will be to find successful strategies that will enable the region “Integrating
Wind Power into the Latin American Energy Matrix”. Participation in the
EXPO is expected by experts in the field, leading companies in the
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sector, project developers, manufacturers of supplies, government
agencies, investors, research centers, financial institutions, students, etc.
14. According to the Consolidated Financial Statements of the Cable &
Wireless Panama, it has paid dividends totaling to US$934.9 million
during the twelve years of its being at the forefront of mobile telephony in
Panama.
Developmental News
15. The Philadelphia Regional Port Authority [PRPA] and the Panama
Canal Authority [ACP] signed a MoU on 12th June 2009 for increasing all-
water container traffic from Asia to Philadelphia through the canal.
Philadelphia does not now get many calls by container ships that use the
all-water route from Asia as it lacks the channel depth. But the PRPA is
planning to build a large new container terminal called Southport at the
former Philadelphia Navy Yard on the Delaware River that would be
capable of handling the larger post-Panamax ships that will be able to
transit the canal after it completes a third set of locks in 2014. Under the
agreement [renewable after two years], PRPA and ACP will conduct joint
activities and share best practices. Specific areas of focus will include
marketing, research and data interchange, technical advancements and
personnel training programs. In 2008, PRPA cargo transiting the Canal, either
on its way to or from its destination, totaled 1,906,343 long tons and represents half
of all cargo handled by PRPA.
16. According to the Authority of Public Services [ASEP], Panama will
add 31 hydroelectric projects totaling 1047 MW through 2013,
representing investment of US$2 billion. 15 of the projects are under
construction while the other 16 are in final design. According to the
agency, Panama‟s current installed capacity is 1663 MW, compared to
peak demand of 1120 MW at present and is expected to be 1373 MW by
2013. 3 projects of 15 MW would come on line in 2009, 7 of 97 MW in
2010, 8 of 364 MW in 2011, 11 of 538 MW in 2012 and 2 of 33 MW in
2013. The European Investment Bank is considering proposals to fund construction
of the 29-MW Barro Blanco hydroelectric project on the Tabasara River and the
three-plant, 115-MW Los Mares hydroelectric complex on the Chiriqui River. Russian
equipment supplier Energomashexport Corp. LLC announced a contract in February
to supply electro-mechanical equipment for the 85-MW Baitun hydroelectric project
on the Chiriqui Viejo River, while Generadora Pedregalito S.A. signed a contract to
construct the 20-MW Pedregalito hydroelectric project on the Chico River. Istmus
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Hydro Power Corp. commissioned its 10-MW Conception hydropower project in
January on the Piedra River in Panama’s Chiriqui Province. Meanwhile, Suez Energy
Central America is building the 26-MW Gualaca, 34.8-MW Lorena, and 57.4-MW
Prudencia projects on the Chiriqui River.
Panama Canal
17. The Panama Canal Expansion Program received its 11th
international award - “Best International Project” - at the 2009
International Logistics and Material Handling Exhibition [SIL 2009] in
Barcelona [Spain] on 4th June 2009. The award was bestowed unanimously to
the Panama Canal Authority [ACP] for its management of the Canal’s expansion to
build a new lane of traffic along the Panama Canal through the construction of a new
set of locks, which will double capacity and allow more traffic and longer, wider ships.
PANAMA – BILATERAL
PANAMA – TAIWAN
18. Since 2006, Taiwan has given US$124.3 million worth "non-
reimbursable cooperation resources” to Panama, of which, till 25th June
2009, there are pending disbursements worth US$37.1 million. Through a
Cabinet Resolution [12th June], the Panamanian Government adopted a series of
measures for monitoring, implementation and completion of the priority investment
program in the social sector between the two nations.
PANAMA – BRAZIL
19. Brazilian President 'Lula' in a meeting in Brasilia on 24th June 2009,
committed with the President-elect of Panama, Ricardo Martinelli to work
together to strengthen cooperation in commerce and trade. The bilateral
trade between the two countries in 2008 was US$416.2 million.
PANAMA – GUATEMALA
20. The Free Trade Agreement [FTA] which was signed between
Guatemala and Panama in February 2009 came into effect w.e.f. 29th
June 2009, covering 93% of bilateral trade. During January-April 2009,
Guatemalan exports to Panama were of US$56 million, against imports of US$128
million from Panama.
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PANAMA – CHILE
21. According to Foreign Minister Samuel Lewis Navarro, the
Panama‟s Cabinet approved on 28th June 2009, the disbursement of
US$6.4 million in compensation to the government of Chile for relatives
of Chileans died in the crash of the helicopter SAN-100 on 29th May 2009
in Calidonia [Panama City].
REGIONAL / MULTILATERAL
IMF Inaugurates Technical Assistance Center for Central America,
Panama and the Dominican Republic
22. The International Monetary Fund [IMF] launched on June 24, its
Technical Assistance Center for Central America, Panama, and the
Dominican Republic [CAPTAC-DR] in Guatemala City. It is the seventh
IMF regional technical assistance center worldwide and the second in
the Western Hemisphere. This regional technical assistance center will
serve Costa Rica, the Dominican Republic, El Salvador, Guatemala,
Honduras, Nicaragua, and Panama. CAPTAC-DR, with a projected 5-
year budget of US$35 million, will be supported with donations from
Spain, Mexico, Canada, CABEI, beneficiary countries, and the IMF. The
Center will be a key element in the capacity building efforts that the Fund
has been providing to countries in the region. The Center will focus on
the three core capacity-building areas: public finances [tax and customs
administration and public financial management]; money and banking sector
[financial sector supervision and regulation, monetary policy, and debt management ];
and macroeconomic statistics.
23. According to the Latin America Telecommunication Industry Report
2008, Mobile subscribers in 19 Latin American countries [Argentina, Bolivia,
Brazil, Chile, Costa Rica, Colombia, Cuba, El Salvador, Ecuador, Guatemala,
Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Dominica, Venezuela, and
Uruguay] registered 444 million in 2008, with a penetration rate of around
78%. Statistically, 77.8% of the mobile business market in 2008 was seized by
America Mobil, Telefonica, and Telecom Itlia, wherein, America Mobil, being Latin
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America's largest operator, boasted of 172 million mobile subscribers in 2008
accounting for 38.6% of total users.
24. ARKRAY Inc. [manufacturer of clinical test device and vitro diagnostic
medical products] and Nipro Corporation [manufacturer of medical devices and
pharmaceutical products] have signed a distribution agreement to supply
self monitoring blood glucose devices to 14 countries in Latin/Central
America [Argentina, Chile, Colombia, Costa Rica, Ecuador, El Salvador,
Guatemala, Honduras, Nicaragua, Panama, Peru, Puerto Rico, Uruguay, and
Venezuela]. Both the partners are based in Japan.
CONCURRENT COUNTRIES
EL SALVADOR
25. During January-May 2009, Salvadoran imports and exports were
worth US$2917 million & US$1604.9 million respectively.
HONDURAS
26. The Honduran army took over the Presidential Palace in
Tegucigalpa in the early hours of 28th June and packed President Manuel
Zelaya off in his pajamas to Costa Rica in a plane. Within hours, a bare
quorum of the Honduran Congress had sworn in Robert Micheletti
[President of Congress], as a new, President, backed by the Honduran
Supreme Court and the army. Latin American Heads of state quickly
condemned this development and isolated Micheletti. Guatemala, El
Salvador and Nicaragua cut off commercial ties with Honduras. Along
with them, every country in South America has withdrawn its ambassador.
27. During January-April 2009, Honduran imports and exports were
worth US$2143.06 million & US$889.66 million respectively.
NICARAGUA
28. During January-April 2009, Nicaraguan imports and exports were
worth US$1057.44 million & US$469.91 million respectively.
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29. Basic Economic Data is on pages 9 – 11.
30. Trade enquiries received are on page 12.
This issues with the approval of Ambassador.
[Ashish Mehta]
Second Secretary
Distribution: As per standard list.
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BASIC ECONOMIC DATA
PANAMA
January to March 2009
GDP [2008] $18558.1 million; [Growth 9.2%], Per Capita: $5466.
Inflation [2008] 8.7% [2008]; FDI: $2402 mn;
[2007] 4.2% [2007]; FDI $1907 mn.
Total Trade [2008] $10194.87 mn; Trade Balance $[-]7905.45 mn.;
[2007] $7935mn; Trade Balance $[-]5755 mn.
Exports Jan-March 2009 - $216.06 mn; $1144.71 mn. [2008].
5 Major Destinations USA [$435mn], Netherlands [$123 mn], Costa Rica [65.9 mn], Sweden
[$62.6mn] & United Kingdom [$61.3 mn].
5 Major Export Seafood [$420 mn], Fruits, Citrus fruits, Melons & Watermelons [$351 mn],
Items Scrap Iron [$35 mn], Paper & Carton [$29 mn], Meat [$23.4 mn]
Imports Jan-March 2009 - $1798.33 mn; $9050.16 mn. [2008].
5 Major Sources USA [$2683 mn]; Costa Rica [$456 mn]; China [$454 mn]; Japan [$385 mn];
Mexico [$312.7 mn].
5 Major Import items Carburant, gasoline & Jet fuel [$1902 mn] ; Vehicles [$271 mn] ; Iron and
Steel structures [$186mn] ; Medicines and pharmaceutical Products [$181.4
mn]; Corn [95.9 million]; Mobile phones [90.5 mn].
Exports to India [2007-08] $22.07mn.
Mineral fuels/oils/waxes, Wood.
Imports from India [2007-08] $68.41 million
Floating Structures, Garments, Iron & steel articles, Rubber & Plastic
articles, Metal Tools & Kitchen items, Pharmaceuticals.
Top 5 Items of Imports from India [2007-2008 DGFT figures]
Garments $22.78 mn
Man-made filaments & staple fibres $ 5.61 mn
Rubber & Plastic Articles $ 5.47 mn
Man-made staple fibres $ 4.05 mn
Pharmaceuticals $ 3.14 mn
Iron & Steel articles $ 2.13 mn
Colon Free Zone
Total Trade [Jan-June 2009] $ 8067.7 mn. Total Trade [2008] $19209.9 mn.
Re-exports $ 4148.5 mn. Re-exports $ 9874.2 mn.
Imports $ 3919.2 mn. Imports $ 9335.7 mn.
Imports from India [2007-08] $ 54.0 mn.
Re-exports to India [2007-08] $ 3.0 mn.
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EL SALVADOR
January – May 2009
GDP [2008] $22119.8 mn; GDP Growth 3.2%; Per Capita: 3068; Debt $9707.6 mn.
[2007] GDP $20,372 mn; GDP Growth 4.5%; Per Capita: $3,574.
Inflation 8.59% [2008]; FDI : $ 6701.4 [2008]; 4.9% [2007]; $5916.2 mn. [2007]
Total Trade $14343.5 mn. [2008]; $12,657 mn. [2007]
Trade Balance: [-]$ 5245.3 mn. [2008]; [-]$4728 mn.[ 2007]
Exports Jan-May 2009 - $1604.9 mn; $4549.2 mn [2008].
5 Major Destinations USA [$2184 mn], Guatemala [ $620.5mn], Honduras [$ 589 mn] , Nicaragua [$
251 mn], Costa Rica [$ 166 mn]
5 Major Export items Coffee [$258.7mn], Sugar[$75 mn], Shrimps [$0.5 mn]
Imports Jan-May 2009 - $2917 mn; $9754.5 mn. [2008].
5 Major Sources USA [$ 3336 mn], Mexico [$874 mn], Guatemala [ $ 826 mn], Honduras [$375
mn]; Ecuador [$354 mn]; Costa Rica [$260 mn].
5 Major Import items Petroleum Oils [ $1864 mn], Vehicles [ $563 mn]
Exports to India $5.86 mn. Wood and wood articles and wood charcoal [ $2.04mn]
[2007-2008]
Imports from India $12.12 mn. Vehicles, Pharmaceuticals, Iron and Steel, rubber articles, machinery
[2007-2008] and appliances.
HONDURAS
January – April 2009
GDP $14319 mn; Per Capita $1858.
[2007] $12,322 mn; Per Capita: $1635
Inflation Accumulative Inflation: 11.4%; FDI: 877 mn.
8.9% [2007]; FDI: $814.9 mn. [2007]
Total Trade $11472.7 [2008]; $9175 mn [ 2007]
Trade Balance: [-]$ 6170.9 mn [2008]; [-]$ 4791 mn [2007]
Exports January-April 2009 - $889.66 mn; $2650.9 mn [2008].
5 Major Destinations USA [$1077.3 mn], El Salvador [$245.3 mn], Guatemala [$181 mn], Mexico
[$162.3 mn] , Bélgium [$157.8 mn]
5 Major Export items Coffee [$620 mn], Bananas [$383.7 mn], Sea food items [$193.10 mn], Palm Oil
[$183.4 mn], Textiles [$52.77 mn].
Imports January-April 2009 - $2143.06 mn; $8821.8 mn [2008].
5 Major Sources USA [$3560.6 mn], Guatemala [$761.7 mn], Mexico [$486.9 mn], El Salvador
[$477 mn], Costa Rica [$347.5 mn]
5 Major Imports items Combustible and Lubricants [$1945.5], Electrical machinery [$1596 mn],
Chemicals [$1114.9], Metals & their manufactures [$721.8 mn], Transport vehicles
[$613.3 mn].
Exports to India $2.13 million. Paper and paperboard articles, Precious/semi- precious stones.
[2007 - 2008]
Imports from India $95.19 million. Silk, Precious/ semi –precious stones, Iron and Steel, Rubber
[2007 - 2008] articles, Pharmaceutical products, Cotton, Electrical machinery, Vehicles.
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NICARAGUA
January – April 2009
GDP [2008] $6365.3 [est.], Per Capita: $1122.8
[2007] $5690.6 mn., Per Capita:$1017
Inflation [2008] 13.77%; FDI: $600 mn.
[2007] 16.88 %; FDI: $335 mn.
Total Trade [2008] $5775.20 mn; Trade Balance: [-]$2798 mn.
[2007] $4781 mn [ 2007]; $[-] 2377mn [ 2007]
Exports Jan-April 2009 - $469.91 mn; $1488.6 mn [2008]
5 Major Destinations USA[$439 mn], El Salvador [$217.1 mn], Costa Rica [ $102.9 mn], Honduras
[$101.4 mn], Mexico [$78.9 mn ]
5 Major Export items Coffee [$ 278.2 mn], Meat [$210.7 mn], Peanut [$90.2 mn], Beans [$79.8 mn],
Gold [$ 78.1mn].
Imports Jan-April 2009 - $1057.44 mn; $4286.6 mn [2008]
5 Major Sources USA [$897.4 mn], Mexico [$361.6 mn], Costa Rica [$341.1 mn], Guatemala
[$263.3 mn], El Salvador [$229.2 mn].
5 Major Import items Petroleum and Lubricants [$953.7 mn], Vehicles [$265.2 mn], Pharmaceutical
Products [$297.9 mn], Construction Material [$240.9 mn], Agrochemicals [$147.7
mn]
Exports to India $0.38 mn
[2007 - 2008]
Imports from India $53.44 million.
[2007 - 2008] Pharmaceutical products, rubber articles, Iron and steel, vehicles.
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Trade Enquiries Received During June 2009
Panamá
Sl. Company Details Products of Interest
No.
1. Integrate Consortium, S. A. Textiles ( Home furnishing)
Mr. Dionisio Boutet
President
Calle 53 marbella Edificio World Trade
Center Piso 11, oficina 1102
Tel.Fax: 265-8240 / 214-8233
intercon@cwpanama.net
2. Moreira´s Garments and Accesories
Karem Moreira
Tel: 390-3254
kmoreiras@gmail.com
3. Unisistemas Software and Hardware
Mr. Elio Ruiz
Tel. 507 236-1005
eruiz@unisistems.com.pa
4. MARKETING IDEAS Promotion and Marketing
Mr. Gabriel Ortega
Tel.: 261-3399 / 6674-5824
gabriel.ortega@americaopina.com
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