By Patrick Connelly
It’s a bit strange that a country, after experiencing years of economic growth, would democratically decide to shift political directions. However, this is exactly what has happened recently in Panama. In the most lopsided victory in the country’s short democratic history, Democratic Change Party (DCP) candidate and businessman Ricardo Martinelli defeated opponent Balbina Herrera, ushering in a new political force at a time in which Panamà stands on the brink of becoming a economic force. But it remains to be seen if this gamble will pay off for the economy and foreign investors.
Martinelli does not take office until July 1, 2009, but already Panamanians are ecstatic about the country’s future under the supermarket chain owner’s leadership. Possessing great business acumen as well as an astute political mind, Martinelli appears to be the perfect remedy for these uncertain economic times. While the incredible boom Panama experienced in the last 6 or 7 years has largely deflected a severe economic downturn similar to the ones in other Central American countries, growth has significantly slowed this year, something which has definitely not gone unnoticed. While still healthy, economic growth has shrunk from 9.2 percent in 2008 to 3 percent in 2009.
The real estate sector is feeling the economic pinch most severly. Whereas only a year ago it was quite easy for domestic and foreign investors to get large construction and investment loans, such ease is no longer possible. Many of the towering condo and apartment buildings in Panama City lie dormant, half finished steel cable skeletons.
Martinelli plans to tackle the financial crisis by improving Panama’s infrastructure, in hope that a less chaotic environment will be more inviting for foreign investors. The president-elect has laid plans for a subway in the capital to alleviate the ever growing traffic problem, as well as a host of tax breaks and incentives aimed at luring foreign dollars. A major proponent of a flat tax for businesses, Martinelli also opposes the request of the U.S. Senate for Panamà to turn over tax documents. While Panamà has recently come under international scrutiny for being a so-called “tax haven”, Martinelli’s stubborn approach has been welcomed by Panamanians.
No one really expects Martinelli to bring the Panamanian economy back to the golden days of ‘06,’07, an d’08. At least not in the immediate future. In fact, many projections have the economy slowing even further in 2010. But, as said before, Martinelli has proved through his success in the private sector to understand the business world and has made a modest goal of stabilizing the country. If Panamà can come out of the current crisis relatively unscathed, the president-elect believes that the country will be poised for incredible economic prosperity as struggling countries will look to Panamà for stability and dependability in the investing and banking sectors.
photo provided by rupertomiller at http://www.flickr.com/photos/rupertomiller/3408143003/
