Caribbean & Central America - February 2011 (ISSN 1741-4458)

Local economists now expect Panama's economy to grow strongly over the next four years, with foreign direct investment of at least US$20bn over this period. Optimists expect GDP growth of 9.2% this year, 13% in 2012, 11% in 2013 and then a slump to 4.9% in 2014. Such fast rates of growth are likely to create bottlenecks, especially in the labour market, which in turn may lead to higher-than-expected inflation. The other big inflation risk is that oil prices will rise.

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