An experimental Panama wind farm in the Chagres region of Colon province has been a hit. The test project has reduced electric costs for the Colon, Panama coastal communities of Cristobol and Piña and residents are interested in the project being made permanent.

Panama has to import all of its fossil fuels so Panama has worked to develop hydroelectric power taking advantage of its mountainous interior and heavy rainfall. More recently Panama has started developing wind farms. This has been a government initiative more than a community one but now it appears that wind farms could become popular.

If the Chargres region wind farm is made permanent it will be extended and serve the communities of Sherman, Coco Solo, and Isla Margarita as well as the current locations.

A report published by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) reveals that Panama is providing more education to its children. The same study reveals that the economic value per year of education past 12 years has gone down. More advanced education for Panama workers allows employers to pick, choose, and pay lower salaries.

Now we hear that President Martinelli is pushing to provide uniforms and books for all public school students. For those from North America this may sound strange but historically there has been a large gap between the rich and the not so rich in Panama. The ECLAC study mentioned above notes that in 2001 the average education of a worker in Panama was 8.7 years and by 2007 it was 9.3 years. However, the average education for a worker in the cities is 10.5 years versus 4.3 in the comarcas, the indigenous areas of Panama.

The main investment that Panama needs to make in education is in the outlying areas. The simple measures of providing uniforms and books for all students will be a good place to start.

Investment in general in Panama has helped alleviate poverty over the last two decades according to ECLAC’s Social Panaorama of Latin America study. Now as Panama invests more in its people as well as its infrastructure we can expect a better educated and trained workforce to continue to make Panama more prosperous.

In the first half of the year Colon Free Zone trade increased 8.9 percent over last year. This growth happened despite a global recession. Imports were substantially up whereas exports were down 15 percent. This is typical as one comes out of a recession and businesses import goods and materials to gear up for the recovery whereas day to day business is still slow.

Panama has been touched by the recession elsewhere but has experienced slow growth, not a recession. Panama trade is strong and a harbinger of economic growth to come.  Free trade agreements such as the one pending with Panama and Canada will further stimulate growth in this Central American economic miracle.

COPA, Panama’s flag carrier has ordered 13 new Boeing 737-800 jets and placed an option for another 8. While the rest of the world is struggling with financial hard times Panama is planning for and investing in the future. Panama’s economy has slowed down with the global recession but there is still economic growth in this little country at the crossroads of the Americas.

Boeing and COPA have issued a joint statement stating that with conversion of previous options to buy planes and new orders COPA has 27 new Boeing jets on order. COPA flies out of Panama City’s Tocumen International Airport and has nearly fifty connections throughout North and South America as well as Europe.

According the joint statement, “Copa operates from Tocumen International Airport, a time-saving hub on long routes between the United States, South and Central America, and the Caribbean. The airline flies four of the world’s longest 737 routes from there – to Buenos Aires, Santiago, Sao Paulo and Los Angeles – thanks to the 737-800′s exceptional range.”

Panama is a natural for making air connections with its central location on the land bridge connecting the Americas. As Panama expands its air net we can expect to see more business pass through and to Panama, especially as the recession mends itself in the coming year. Investing in Panama has been successful in the past decade or more and investing in Panama will become wiser in years to come.

Panama’s economy is thriving despite a world wide recession. Panama is often referred to as the place to ride out the recession. Investing in Panama with its strong economy is best plan for years to come.

One of the items that raised the cost of living in Panama last year was the cost of electricity. Inflation in Panama became a political issue that helped bring a change of government. At the first cabinet meeting of the Martinelli administration one of the issues was the cost of electricity. Panama’s new secretary of energy proposed that the government freeze its prices for electricity generated by government owned plants.

In addition the minister proposed more development of hydroelectric and wind power as Panama has to import all of its fossil fuels.

Panama, according to Mr. Martinelli, has some of the world’s highest electric rates. Thus he promised in his campaign to work to reduce electric costs in Panama. It appears that the new government is serious about reducing electric costs which in turn will help Panama keep inflation in check.

Panama free trade options do not necessarily need to include the USA. Canada is going ahead with its free trade deal with Panama (and Colombia as well). Panama is talking with Costa Rica and the Dominican Republic to expand both trade deals to include more goods. Panama already has preferential trade status with the USA.

A free trade deal with the United States would provide Panama consumers with cheaper US products. It would no necessarily improve exports all that much.

US Senator Chuch Grassey (Iowa) spoke before the Washington International Trade Association recently and made the point that Canada and the European Union are proceeding with free trade agreements where the US is balking, Korea, Colombia, and Panama.

Certainly, in the case of Panama, the US has nothing to fear from a trade deal but politics being what they are a deal may be far off.

In point of fact, no trade deal with the USA will not hurt Panama and Panama will expand to other trading partners in the absence of will manifested by the USA.

The Panama government reports that in May the annualized inflation rate was 2.5%. This is a welcome respite after a couple of years of accelerated inflation in Panama. However, there are two other items, the price of oil and the electric rebate.

Oil is going back up again and has passed $70 a barrel. When the price of oil came down it took about six months for the cost of higher oil prices to work their way out of the production chain. Likewise expect about six months before the higher price of energy starts to push prices up again.

When the price of oil was $150 a barrel last year the government subsidized home electric bills where electricity consumption per month was less that 500 KW Hours.

As of this week the cutoff is being changed to 300 KW Hours per month.  This change will save the government about $6.6 million a year. The change will also cost middle class Panamanian citizens and expatriate residents $6.6 million a year!

Looks like inflation in Panama is on its way back.

The Free Trade Treaty between the United States and Panama has gone to the US Senate for debate today.

Panama has be anxiously awaiting this moment in hopes that a free trade agreement with the United States, which is already Panama biggest trading partner, would increase exports to the world’s richest market.

The treaty has been held up by complaints in the United States regarding labor issues and banking secrecy in Panama. However, the Obama administration is pushing ratification for this treaty as well as those with Colombia and South Korea.

Investment in Panama can be expected to benefit from more open trade between Panama and the USA.  As the economy improves across the board we can also expect to see the Panama real estate market start to accelerate.

But, treaty or no, Panama travel and living in Panama are still attractive and will draw North Americans either way.

Admin2, I read your article about the IDB and helping support poor countries in Latin America. I come from a more cynical viewpoint. I think that many of these countries remain poor because the internationa aid money they receive goes into the hands of the few and does NOT go to help provide jobs and social stability.

I do not particularly like Mr. Chavez in Venezuela but perhaps he would have been less popular if the wealth had been more evenly distributed in Venezuela. Now he want to be president for life, not to “help the people” but simply to satify his own lust for power.

In general Panama is doing pretty well but the long term rap on Panama is still government corruption. All that money goes to finance big projects and all we see is politcal figures wearing designer apparel on government salaries.

I am afraid that I am not optimistic about getting a light rail system in Panama within four years. The legislative haggling followed by secretive administrative work and payoffs will take four years. Then the work will start and be delayed by strikes and the need for payoffs. Along the way the final system will barely resemble what was originally promised. I expect to see Diablos Rojos on the streets ten years from now! On the other hand 25 cents to get from el Centro to Cinco de Mayo is not a bad deal.