I first recommended Panama as a top choice for living, retiring, investing, and doing business overseas more than 15 years ago, and I'm more bullish on this country's prospects and the opportunities it offers today than ever.
Why should you think about retiring or investing in Panama as opposed to the many other places around the world you might also be considering?
One reason could be because Panama's economy has weathered the storm of the past seven years much better than most and stands today as the fastest growing not only in the region but in the hemisphere. This is important not only for the would-be investor but for the prospective retiree to this country, too.
In 2008, many began calling for the collapse of Panama's property markets. I didn't agree. I predicted that real estate values in this country, specifically in Panama City, would soften...fall a bit...but not collapse. I took this position with confidence recognizing that Panama's property markets are not fully dependent on U.S. buying pools. Post-2008, U.S. buyers were thin on the ground in Panama, as they were elsewhere in this region. However, unlike elsewhere in this region, Panama continued to attract other buyers, from Venezuela, El Salvador, Honduras, Colombia, etc.
Panama's property markets did not crumble in the wake of the 2008 meltdown, and neither did its economy. Panama Canal revenues have surged these past six years, continuing to keep this country cash comfortable. In addition, Panama is enjoying growth in both its financial services and tourism sectors and has established itself as a top tourist shopping destination. Now, instead of flying up to Miami to eat, play, shop, and drop some cash, South Americans with money come to Panama, which is easier to get to and far easier to get into than the United States in this War On Terror age.
Panama's healthy economic state translates to:
- Ongoing investment in developing the country's infrastructure
- Job creation
- Appreciating real estate values
- Expanding foreign investment
- Overall stability
Panama's economy has expanded by double digits for four of the last eight years. Its current growth rate, estimated by the IMF to be as much as 6.6% for 2014, while not double digits, makes it the fastest-growing economy in the Western Hemisphere. Foreign direct investment continues up every year, and unemployment is low and falling (while unemployment is increasing in neighboring countries including Nicaragua, Honduras, and Costa Rica). In 2009, the World Economic Forum Competitiveness Index ranked Panama at 58; in 2013, it ranked Panama at 48.
Panama's debt was 41.3% of domestic gross product in 2013, compared with 70% in 2004. This reduced debt burden has led to improved credit ratings.
The country's former President Ricardo Martinelli, whose five-year term ended in 2014, was an important part of getting this country to where it is today. Throughout his time in office, Martinelli targeted key points of concern and key challenges that could impede the country's competitive growth agenda, specifically and especially, for example, traffic in Panama City. The traffic in this country's capital qualifies as among the worst in the world. This is a direct result of the country's economic growth--more people earning more money are able to afford to buy more cars, meaning additional cars on the road every month. Meantime, Panama City's road system was developed when this was a much sleepier place. Something had to give.
Martinelli targeted this challenge head on from his first month in office. First, he took the old Diablo rojo buses (these brightly painted old U.S. school buses had been used for local transportation for decades but had become a main source of traffic chaos) off the roads. The prior two governments had said they wanted to replace these buses; Martinelli actually did replace them (well, most of them). In their place today are modern, air-conditioned buses that follow actual routes.
Part 2 of Martinelli's plan for addressing the traffic mayhem on Panama City's streets was to build a metro. Again, the previous two administrations had talked about the need for a metro; Martinelli actually built a metro that opened this year. Line 2 is now underway.
Looking ahead, where will additional growth come from for this country?
Tourism. Panama is too small for mass tourism, but it can leverage its geography (two coasts, lots of islands), its history (pirates, gold route, Spanish, French, and American influences), and its infrastructure to be very competitive as a regional tourist destination. Tourism is growing, and tourism revenues now match canal revenues on an annual basis.
Logistics. Since taking control of the Panama Canal, this country has seen three important related milestones--dramatic increases in tonnage, prices, and revenues, primarily as a result of reducing transit time from 33 to 23 hours. The Panama Canal returned a little over $600 million to the national treasury in 2013. In a country this size, that's a lot of money. And direct canal revenues are only the beginning of this story. Ripple revenues from the country's logistics industry are also big and growing. The expansion of the canal, when it is complete, will allow for even more traffic (estimations are for as much as triple current figures).
The good economic news in Panama is, in fact, great news for the potential foreign retiree. Meantime, this country offers every retirement lifestyle option possible, from cosmopolitan in Panama City to Pacific coast (in Coronado or, more affordable and also more remote, Pedasi), from Caribbean (Bocas del Toro) to highlands (Boquete, El Valle, or Santa Fe), where the weather is more comfortable and the rivers, waterfalls, and wildflower-covered hillsides make for great views from your bedroom window each morning.