Panama is taking another step to control food costs and thus help control inflation. There will be ten percent reduction in import taxes imposed on some imported processed meats such as ham and Vienna sausage. Although the cost of the government’s hypothetical weekly food basket, the “canasta basica,” has leveled off Panama is taking preemptive steps to reduce the cost of living in Panama. Panama’s real estate boom has been partially based upon the low cost of living in Panama. Part of the affect of a lower cost of living might be a stimulus to other parts of the economy such as housing construction.

Although this example only applies to imported ham and sausage it is an example of the steps that Panama is taking to reduce the cost of food and the cost of living in this country. Over the last two decades since the ouster of dictator Manuel Noriega foreign investment in Panama has driven job growth but not necessarily higher wages. The low wage scale in Panama, in fact, attracts business.

Because more people are working at more jobs in Panama the level of poverty has gone down dramatically. However, inflation started to eat away at financial gains of Panama workers last year and was, in part, why President Martinelli’s Democratic Change Party won the election so handily. The government seems to be carrying out its promises made during the election campaign to work to better the lives of the average Panamanians.

A side benefit will be to reduce the cost of living for expatriates too. Thus Panama will retain its reputation as an inexpensive tropical paradise with easy residency requirements that is friendly to investment. This will, in turn, continue to provide jobs and drive Panama’s continually growing economy.