Panama’s latest export: remittances
January 20, 2012 by Ron Buchanan
www.beyondbrics.com
Forget the wide-brimmed white hats that Panama is synonymous with. The country’s latest export? Remittances.
While remittances from their emigrants have long been a part of the lifeblood of the economies of Mexico and Central America – Panama has emerged as an exception in the region. The country last year became a net exporter, rather than recipient, of remittances. It reported outward remittances of just over $1bn in 2011. This was money sent by foreigners who live and work in Panama to their home countries, mainly the United States and Colombia.
What is driving the phenomenon is the $15bn in public works projects that has been pledged by the president of Panama, Ricardo Martinelli. The projects include huge hospital complexes, a Metro system for the capital, a massive conference centre and, of course, the $5.2bn expansion of the Panama Canal, the biggest infrastructure project in Latin America.
Private enterprise has been quick to get in on the act. Donald Trump has built a characteristically understated (beyondbrics is fond of understatement) Trump Ocean Club hotel that dominates the Panama City skyline and is the tallest building in Latin America.
Not surprisingly, the Panamanian economy grew by probably just over 10 per cent last year and Martinelli, a supermarket tycoon, is hoping for more to come. So Panama’s outward remittances are especially different within those of the region.
The inward remittances of the likes of El Salvador and Guatemala are sent back home by the huddled masses in the US. Those sent out from Panama are largely sent by relatively very well-heeled engineers, accountants, real estate agents and other professionals.
So Panama has a booming economy. What’s not to like? Well, rather a lot of things according to Panamanians. Opinion polls that once rated popular support for Martinelli have downgraded his rating to little more than half of that.
What Martinelli’s supporters regard as his ebullience, others see as high-handedness. And Panamanians, of course, know an autocratic leader when they see one.
In addition, there has been trouble at t’mill. T’mill in question being the core of the Panama Canal expansion project, more than $3bn in new locks being built by a consortium led by the Spanish construction company, Sacyr Vallehermoso.
After five days on strike, urgent peace talks are expected to resolve workers’ claims on pay and conditions.
One union leader explained that, given inflation, the $2.90 per hour minimum wage “is only scarely enough for food”.
As a former supermarket chief, surely Martinelli will have something to say about that.
