Posted by Tropiland Editor on October 26, 2009
Panama’s exports are hurting big time. The latest official numbers from the Controller General’s office show some $MM500 (for 2009 up to August) of exportation revenue, a number that represents a 37.5% (!) reduction from the previous year and a 9.9% increase in 2007.
It’s obvious, and rather dramatic I may add, that the global crisis has now entered every aspect of Panamanian economy: tourism, real estate, agriculture, industrial processes, coffee, fisheries and so on.
The majority of Panama’s exports are to the US and are comprised of mainly agricultural products. Adding to the already dismal immediate future projections is the fact that this is the year of El Nino. The climate change will greatly impede production of key products like coffee, sugar and bananas, compiling even more problems in the ailing Panamanian exportation situation.
Posted by Tropiland Editor on September 1, 2009
Business Monitor International – It’s hard not to conclude that China’s economy is showing the hallmarks of a massive bubble, which, if burst, could lead to painful readjustments at a later date.
The root of this bubble is all the money that is being pumped into the economy to boost economic growth. It seems that the mantra of Chinese policymakers has been ‘growth at any price’, for the sake of social stability. While the CNY 4 trillion (US$586 billion) fiscal package announced last November was impressive by any standards, the questions are whether this money is going to the right place, and what happens once this stimulus is scaled back.
According to various reports in the international media, 20% of new loans may have gone straight into the stock market, with a further 30% into the property market. No wonder then that the Shanghai Composite Index is up 60% in value since the start of 2009. As for total loan growth, the figure was recently at an astonishing 34% . By comparison, in 2003 at the height of China’s previous investment boom, loan growth was ‘only’ 24%
All this begs the question of how sustainable China’s recent economic resurgence really is. Real GDP growth accelerated from a 20-year low of 6.1% in Q1 2009 to 7.9% in Q2, and various estimates of seasonally-adjusted quarter-on-quarter growth put the corresponding figures at 3% and 16% respectively. While the world has cheered China’s rebound and is counting on the Middle Kingdom to lead us out of recession, I increasingly fear that the scenario of a slump in China could be coming closer to reality.
How, for example, will Chinese policymakers cut lending sharply without bursting the stock market bubble or for that matter leaving the economy in the lurch? Keep in mind that China cannot count on exports yet, since these were still down 23% in July.
And what about loan quality? The sheer surge in loans has been so steep that I have to wonder about the diligence of lending and to what extent these will be repaid. Recall that it was only a decade or so ago that Chinese banks were saddled with tens of billions (some say hundreds of billions) of dollars’ worth of non-performing loans. This necessitated government capital injections at the major banks. Admittedly, China has US$2 trillion in forex reserves, but that doesn’t mean that it wants to use these to bail-out banks and companies every decade.
Chinese policymakers have thus far shown tremendous force in preventing a ‘hard landing’, but their biggest challenges may be yet to come.
Posted by Tropiland Editor on August 27, 2009
The Economist has an excellent article about the next steps that the world’s central banks will on the interest rates.Every day brings its own topic, I suppose. Apparently the inflation will not be a problem!The obvious question is: “what does this mean for Panama? Hmmm … the problem is complicated and the thesis is subject to debate. First of all, my theory is (and I say this for lack of a set of econometric instruments ) the fact is that the economy of Panama, for having a system of free quasi-banking (quasi because Panama survived, during the bank blockade of the crisis of 1987-1989) and conservative in “circulating” the dollar, an economy of low labor productivity, with information flows certainly deficient and a culture of conspicuous consumption that they restrict the effective capital channeling, it has an economy structurally deflationary.
That’s why the inflation in Panama, even historically, has been greatly less than in the rest of Latin America … for the better, in many of the cases. When the USA exports inflation, Panama feels but only slightly. In Panama, therefore, there are different factors that come into play as more important like the cost of living.The surest thing is that this whole economic discussion is a product of the phenomenon of costs increase, instead of demand, where generally monetary crisis hits first.
Posted by Tropiland Editor on November 16, 2008
Source: International Herald Tribune Blog
Troubles in the budget airline industry could send ripple effects through second-home markets around the world.
Airlines are expected to offer 46.3 million fewer seats this winter and 451,000 fewer flights, according to the Official Airline Guide. The list of collapsed airlines includes XL Airways, Zoom, Sterling.dk, Oasis Hong Kong, Silverjet and MaxJet.
Property industry executives have long believed there is a direct correlation between the availability of cheap flights and the growth of a vacation market.
Now that budget airlines are shutting down and dropping routes, some fear smaller markets will suffer.
“The expansion of low-cost flight routes leaves destinations served by single carriers particularly exposed to the withdrawal of the service,” Harry Lewis, international residential director at property firm Savills, recently told the Daily Telegraph of London. Read Full story here
Editor’s Note: Is this drop back in the cheap airline industry going to effect Panama? We think the impact would be minimal and here are the reasons why:
- Panama’s second home real estate market is in its infancy. The majority of buyers are mostly aiming at permanent relocation to Panama.
- Even though there are a lot of European investor’s and developers, the overwhelming majority of Panama real estate buyers are North American’s or neighboring Latin Americans (Venezuelans, Colombians etc.) that already have access to Panama through regular airline routes.
