Winners: Panama, Peru and the Dominican Republic. Losers: Haiti and Ecuador.
BY CHRONICLE STAFF
Panama's economy will have the best performance of any country in Latin America this and next year, according to a Latin Business Chronicle analysis of new forecasts from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
Panama's GDP should grow by 8.5 percent this year and another 7.5 percent next year, ECLAC says in a new forecast released today. That's better than any other country in Latin America and also confirms earlier forecasts from the International Monetary Fund (IMF) predicting Panama as Latin America's star economy in 2007 and 2008. (See GDP Outlook 2008: Venezuela Worst, Panama Best).
The forecast comes as Panama has awarded its first contracts for the $5.2 billion expansion of the Panama Canal (see Panama Canal Expansion Underway). However, Panama is also getting help from such sectors as real estate and tourism. Panama is the fastest-growing tourism market in Latin America, measured by arrival growth, according to a Latin Business Chronicle analysis based on World Tourism Organisation data (See Tourism Winners: El Salvador and Panama).
Panama is expected to boost arrivals further thanks to a new agreement with Royal Caribbean International, which will open a hub in Colon for Caribbean cruises starting in December. "Colon is a spectacular Central American city and sailing from Panama not only offers our guests an exciting itinerary, but also allows more travelers more convenient opportunities to enjoy a Royal Caribbean cruise," Adam Goldstein, president of Royal Caribbean International said at a press conference in Panama today. "We are pleased to bring our signature style of cruising to Panama as we extend our brand globally, and we thank the government for their enthusiastic support."
LATIN AMERICA GROWTH
All in all, Latin America is set for GDP growth of 5.0 percent this year and 4.6 percent next year, ECLAC forecasts. That means ECLAC coincides with the IMF's revised 2007 forecast, but is more bullish than the fund's predictions for 2008 growth of 4.4 percent.
"Against the backdrop of an extraordinary performance on the part of the world economy, which is enjoying solid, widespread growth, the Latin American and Caribbean countries are currently going through extremely favorable economic times," ECLAC said today in its report, Economic Survey of Latin America and Caribbean 2006-2007.
If the forecasts are correct, Latin America's per capita GDP will have risen by 20.6 percent by the time it completes its sixth consecutive year of growth, ECLAC points out.
Apart from Panama, other GDP growth winners this year are Argentina and the Dominican Republic (7.5 percent each), Peru (7.3 percent) and Colombia (6.8 percent). GDP losers this year include Mexico, Latin America's second-largest economy, which will only grow by 3.2 percent. Haiti and Ecuador follow, with 3.5 percent each. The bottom five is rounded out by Paraguay (4.0 percent) and Bolivia (4.2 percent).
Brazil, Latin America's largest economy, is set to expand by 4.5 percent this year, ECLAC says. That's slightly better than the 4.4 percent the IMF predicts.
Next year, Peru and the Dominican Republic will have the second-best performance after Panama. Their economies should expand by 6.0 percent, ECLAC forecasts. Other strong growth economies will be Argentina, Colombia and Costa Rica (with 5.5 percent each).
The losers next year will be Haiti, Paraguay and Ecuador, with GDP growth of 3.5 percent. Other low-growth economies will likely be Mexico (3.7 percent), Nicaragua and El Salvador (4.0 percent each), ECLAC predicts.
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