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Following the heavy investment in infrastructure projects of the past few years, the insurance sector has enjoyed a prosperous period. The industry is estimated to be managing assets of around $1.9bn, of which investments comprise $1.3bn, or 70% of the total. As a result of Law 12 of 2012 a new legal framework was created to regulate the sector, bringing it more in line with international standards and offering consumer protection clauses for the first time in Panama. The economy’s recent positive performance has also attracted new insurance companies and reduced the market’s concentration. However, the end of infrastructure projects and uncertainties related to the Panama Canal’s expansion could slow down growth, while strong competition, higher-than average inflation and lower returns on investments are putting downward pressure on insurance companies’ profits. This chapter includes interviews with Dino Mon, Director, MAPFRE-Panama; and Gabriel de Obarrio, CEO, Generali Panama Branch.

High economic growth over the past few years has benefitted Panama’s banking sector, which has shown a strong and stable performance. From the third quarter of 2012 to the same period in 2013 there was a 12% increase in total assets, with liquid assets registering the highest growth, at 22%. Assets, deposits and credit continue to grow, although profitability indicators are showing signs of deceleration. With a dollarised economy and free mobility of capital flows, Panama’s highly internationalised capital markets are also showing signs of expansion. In 2013 the traded volume of stocks increased 7% compared to the previous year, reaching $120m. The public sector plays a central role, with a volume of issuance that can make the market vacillate between good and bad years, as happened in 2012-13. Even so, Panama has significant potential to serve as a regional base for international financial institutions operating in global financial markets. This chapter features interviews with Rubens V Amaral Jr, CEO, Banco Latinoamericano de Comercio Exterior; Augusto Restrepo, Vice-President, Bancolombia; and Raúl Alemán, General Manager, Banco General.

At $5.25bn, the Panama Canal expansion project is the largest single investment in the country’s history. The annual contribution of canal tolls to the national treasury has more than quadrupled from $201m in 2000 to $981.8m in 2013. The new set of locks will accommodate post-Panama ships, which can carry up to 13,000 twenty-foot equivalent units (TEUs), compared to the current maximum of 5000 TEUs. Just as the nationalisation of the Panama Canal changed the country’s long-term economic competitiveness, so too will the completion of its expansion project. Not only are revenues from the canal expected to double by 2020, fuelling continued public sector spending on infrastructure and social programmes, the expansion will secure what is now one of Panama’s primary economic resources for the long term. This chapter includes an interview with Jorge Quijano, Administrator, Panama Canal Authority; and a viewpoint from Søren Skou, CEO, Maersk Line.

Since gaining control of the Panama Canal in 1999, the country has recorded impressive economic expansion. GDP growth averaged 6.8% from 2000 to 2012, according to the World Bank, and double-digit growth for four of the past seven years, government data show. Public sector spending on national infrastructure has emerged as the primary driver of expansion in the past few years as the country prepares for the post-Panamax era of the canal. The canal’s impact both domestically and internationally is set to expand substantially upon the completion of a third set of locks, guaranteeing long-term economic progress. The already-established logistics and financial sectors will continue to play leading roles in the wider economy in the long term, while nascent sectors such as tourism and mining show significant potential for growth. Bureaucracy and poor human resources development remain the main hindrances to national economic development. This chapter includes interviews with Frank de Lima, Minister of Economy and Finance; Nicolás Ardito Barletta, Director-General, National Centre for Competitiveness; and José Pacheco Tejeira, Vice-Minister of Foreign Trade.

The banking sector is making steady progress as stability improves and economic growth continues. Banking assets grew by 8.6% in 2012 to AD9.78trn (€92.9bn), although branch access remains relatively limited, with only one bank per 28,000 inhabitants compared to one per 12,000 people in Morocco and one per 9000 in Tunisia. After years of high non-performing loan rates, the central bank is gaining a firmer hold on lending, as well as revitalising the leasing segment through new public housing programmes. The capital markets are expected to benefit from a new raft of initial public offerings. Insurers are also expanding the products on offer, with personal health coverage becoming increasingly popular. This chapter contains a viewpoint with Mohammed Laksaci, Governor, Bank of Algeria, and interviews with Abdenour Houaoui, General Manager, Arab Leasing Corporation; and Abdelhakim Berrah, President, Commission for Stock Market Organisation and Supervision.