Caribbean & Central America - April 2017 (ISSN 1741-4458)

FDI: On 7 April, Panama’s economy and finance ministry (MEF) issued a report which showed that foreign direct investment (FDI) to the country reached US$5.2bn, up 15.9% compared with the previous year. The MEF attributes this to factors including the dollarized system, and the logistics system led by Canal activities such as ports and Colón free zone, among others.

According to a June 2016 report by the United Nations (UN) Economic Commission for Latin America & the Caribbean (Eclac), in 2015 FDI inflows to Panama were up 17% to reach a record high of US$5.039bn – making the country the leading recipient of FDI in Central America.

Human Development Index: The Panamanian government led by President Juan Carlos Varela has trumpeted the findings of the latest human development report released by the UN Development Program (UNDP) on 29 March. The UNDP report for 2016 showed that Panama has the highest human development index (HDI) in Central America and one of the highest in Latin America. The HDI integrates three basic dimensions of human development - life expectancy at birth; mean years of schooling & expected years of schooling; and gross national income per capita. The UNDP report showed that Panama had an HDI of 0.788 in 2015 up from 0.0785 in 2014, ranking it 60 out of 188 countries. This is the fourth highest HDI in Latin America after Chile, which has an HDI of 0.847, ranking 38; Argentina (0.827, 45); and Uruguay (0.795, 54). As regards the rest of Central America, Panama is followed by Costa Rica (0.776, 66); El Salvador (0.680, 117); Nicaragua (0.645, 124); and Guatemala (0.640, 125). Honduras is ranked lowest at 130 with 0.625.

IMF visit: Last month the International Monetary Fund (IMF) released a concluding statement following a recent mission to Panama. Issued on 17 March, the IMF statement projects that GDP growth will reach 5.1% in 2017 and about 5.5% over the medium term, supported by the expanded Panama Canal and the wide range of investment projects currently in the pipeline. The 5.1% 2017 growth forecast is considerably less than the 5.9% forecast by Eclac, however, which put Panama’s GDP growth in 2016 at 5.2%. In its statement, the IMF also projects that inflation will pick up to about 2% in 2017, from 0.7% in 2016, as fuel prices continue to normalise and economic activity strengthens somewhat.