Caribbean & Central America - October 2014 (ISSN 1741-4458)

FDI up. Foreign Direct Investment (FDI) in Panama is at its highest level for five years, according to the finance ministry. In the first half of 2014, FDI was worth US$2.5bn; already higher than the US$2.4bn for the whole of 2013. The finance ministry argues the increase in capital flows is due to the high growth rate of the local economy. According to the official statistics agency, INEC, Panama grew 6.2% in the first half of 2014 and is on course for 7% growth by the end of the year. Construction, fishing and mining have contributed the most to Panama’s impressive economic performance. However, tourism, agriculture and farming all recorded lower growth than last year.

Inflation down. Inflation averaged 2.6% between January and June this year, compared with 3.5% in the same period of 2013. Prices are expected to fall even further in the third quarter, largely due to a food-price freeze implemented in July. As per his pre-election promise, President Juan Carlos Varela froze the prices of 22 items in the basic food basket, which led to a 0.8% fall in the consumer prices index for that month. Varela also instituted some electricity and fuel subsidies in the past few months which have helped to keep inflation down, although it is expected these will be removed at some point in the next few quarters.

FTZ disputes. Panama’s trade disputes with Colombia and Venezuela continue, prompting falls in the volume of trade in Panama’s largest free-trade zone, the Zona Libre de Colón. Re-exports fell by 13.4% in the first six months of 2014, while imports fell 16.5% in the same period. Colombia has restrictive import tariffs in place on clothing and footwear citing country of origin issues. (The dispute is currently before the arbitration body of the World Trade Organization). Meanwhile, Venezuela’s economic problems, including its lack of access to US dollars, has affected the free trade zone’s second-largest market. Bilateral talks on cancelling outstanding Venezuela debts have yet to reach a settlement. While trade with its immediate neighbours has suffered, Panama has managed to increase its exports to the US and the Dominican Republic.

• New PRD secretary general

On 21 September Panama’s main opposition party, Partido Revolucionario Democrático (PRD), elected Carlos Pérez Herrera as the new secretary general of its national executive committee (CEN). A little known PRD representative for the local corregimiento (administrative division) of San Francisco in Panama City, Herrera received 120 of the 302 votes cast by the PRD’s national directorate, defeating lawyer, Juan Felipe Pitty, who received 95 votes; national deputy and member of the old guard, Pedro Miguel González (85); and one of the PRD’s founders, Rafael Pittí, who received two votes. Herrera replaces Juan Carlos Navarro, the defeated PRD presidential candidate in the May general elections who quit in July. Herrera is aligned with PRD president and national deputy, Benicio Robinson, who controls the party legislative caucus and chairs the national assembly’s key budget committee.