Purchase OBG Publications

Making up 18.5% of Panama’s GDP at a value of $6.6bn in 2014, the transport, storage and communications sector has historically been a pillar of Panama’s growth. The solid performance of the transport and logistics sector, which grew more than 17% annually between 2007 and 2014, is set to continue, driven in large part by planned substantial public investment. According to the Strategic Government Plan 2015-19, investment in transport and logistics will total some $6.5bn in that period, with $3.28bn earmarked for logistics projects and $3.21bn for urban transport. The $2bn second metro line in Panama City is one of the plan’s flagship projects for the sector. Beyond the opportunities that this will generate for private players, the increased investment is expected to enable Panama to maintain regional leadership in the highly competitive sector. This chapter contains an interview with Aitor Ibarreche, CEO, Panama Ports Company.

In global terms Panama ranks as a small but dynamic national market for insurers. According to the Superintendency of Insurance and Reinsurance of Panama, general insurers wrote gross premiums of $791m in 2014, 6.2% more than in 2013, while life/health insurers wrote gross premiums of $552m, up 10.8%. Total insurance penetration was 3.07% that same year, with total density at $342 per capita. Though these figures are high in the context of Central America, where penetration varies from a low of 1.2% per capita in Guatemala to 2.2% in El Salvador, they remain low by the standards of OECD member states such as Chile (with penetration of 4.2% of GDP and density of $678 per capita), Spain (5.6% and $1591), Portugal (6% and $1716) and the US (11.6% and $5499). With significant room for organic growth, the micro-insurance, health insurance and life insurance markets continue to offer the best opportunities. This chapter contains an interview with Mauricio de la Guardia, CEO, Internacional de Seguros.

Panama’s capital markets are highly internationalised, with the financial stability of a dollarised economy helping attract global firms looking to expand their Latin American footprint. Though the country has already established itself as a regional banking hub, Panama’s non-bank financial sector still has room to grow. While insurance sector assets nearly tripled in the decade to 2013, from $704.2m to $2.05bn, their share of GDP remained virtually unchanged, at 5-5.5%. Similarly, the total market capitalisation of the Panama Stock Exchange stood at $13.44bn at end-2013, equivalent to 33.3% of GDP, down from 42.8% in 2005 and 36.3% in 2010, and still below the 46.7% recorded on Brazil’s BOVESPA. Panama’s financial markets are expected to benefit from continued growth in 2015 with reasonably low inflation, as efforts toward greater transparency, efficiency and global integration continue. This chapter contains interviews with Felipe Chapman, President, Bolsa de Valores de Panamá; and Jorge Vallarino Miranda, Executive Vice-President, Global Bank.

With a dollarised economy, low inflation and relative political stability, Panama remains a highly attractive regional financial centre. Recording strong performance in 2014, the country’s International Banking Centre, which contributes 7.5% to Panama’s GDP and comprises the national banking system and international banks, is well capitalised with total assets of some $111.4bn as of March 2015. In light of the country’s inclusion in the grey list of the Financial Action Task Force, authorities are currently taking steps to adapt sector legislation to enhance transparency and improve its anti-monetary laundering/counterfinancing of terrorism regime. The banking sector’s outlook is positive, with Panama’s economic environment likely to remain strong with steady growth in loans, deposits and overall assets, while the competitive landscape is likely to see the entrance of new players. This chapter features interviews with Rolando de León de Alba, General Manager, Banco Nacional de Panamá; and Robert Williams, General Manager, Scotiabank Panama.

A pillar of the economy, the Panama Canal’s contribution to the national treasury exceeded $1bn in the 2014 fiscal year, while its direct contribution to GDP reached $2.7bn (6%). The canal saw 325.8m PC/UMS tonnes of cargo pass through the same year, an increase of 2% on 2013, driven primarily by the dry bulk segment, which grew by 20% year-on-year. The Panama Canal Authority estimates its indirect contribution to GDP to be 29%. The canal’s eight-year expansion project, which reached 90% completion in June 2015, will double the waterway’s capacity and have a wide impact on the Panamanian economy. Beyond an increase in toll revenues, it is expected to impact areas as varied as the supply chain, trans-shipment activity and industrial real estate space. Ultimately, it should help Panama retain the importance in global shipping the country has enjoyed for the past century, while solidifying its status as a regional hub. This chapter features interviews with Jorge Luis Quijano, CEO, Panama Canal Authority; and Juan Carlos Croston, President, Maritime Chamber of Panama.

Panama’s sustained economic growth continued in 2014, with the economy expanding by 6.2%, according to the Ministry of Economy and Finance. The figure represented a slowdown from average annual GDP growth of 7.8% over the six years to the end of 2014 – including double-digit growth in 2011 and 2012 – and was partly due to the impact of a weaker global economy, the completion of major public works and slowing public sector spending. Even so, Panama’s construction boom continued in 2014, with that sector expanding by 14.9%, while the real estate and services sector expanded by 9.7% and the transport, storage and communications sector by 6%. This chapter features interviews with Dulcidio De La Guardia, Minister of Economy and Finance; Melitón Arrocha, Minister of Commerce and Industry; and Erick Campos, Managing Director, Fitch Central America.