The world is going through a dark phase of economic recession. Most of the countries are experiencing reduction in per capita income, unemployment and reduction in the annual growth. This is also reflected in the economy of Panama. Although International Monetary Fund has envisaged that Panama will experience fastest developing economic progress among all Latin American countries, the unemployment rate has become 8.3% during the current year. It is almost 1.9% more than they had during 2006. The economy in Panama is heavily dependent upon service. Tourism, banking, trading and commerce are popular source of economic development among Panamanian citizens. This is because of its geographical advantage. Panama has close proximity with the US and most of the sea-bound trading takes the route of Panama Canal. Combined with the tourism, banking and the Colon free trading zone, Panama was growing very fast.
Some current economic data reveal that the construction and transport businesses in Panama are on either plateau phase or showing decline trend. These two comprises about 15% of the total economical strength in Panama. There are also reports of cancellation of hotel booking. As per the statement given by the Association of Hotels in Panama, there is steep decrease of 6-10 per cent in the total hotel booking than it was noticed in the previous year. Tour operators are having hard times managing their clients. The airliners are also facing unoccupied seats in most of their flights. Iberia Airlines, which operate regular flights from Madrid to Panama City via Guatemala has noticed fall in seat occupancy by 7.3 per cent in February and 4.4 per cent in March as compared to 2008. As the latest statistics illustrate, as per the total number of booking cancelled and the number of bookings confirmed till date, it seems that days will be more shadowy during the last quarter of this year.
Panama Canal is one of the busiest water routes in the world. The traffic has decreased in this route also. About 14% reduction in total tonnage freight was noticed. Not only the regular cargo ships, but there is 7% decline in carriage of the 20 foot containers also.
The total construction numbers has plunged to 18% than the last year. There is even more shocking condition in the building permits. The rate has decreased to 52% than the previous year. Only the Project Pacifico has increased the number of commercial buildings by 4%.
The Panama Canal Railway is one of the major losers in this country. There is a steep decline in freight transport by 61%. The railway was carrying 634,000 metric tons of freight in February, 2008. But this has gone down to 263,000 metric tons during the same period.
The global economic meltdown has eaten up 20 million jobs from the US alone. The smaller countries also felt the blow according to their dependence to the US. As we have already discussed, the unemployment is also increased in Panama. Now it has to be closely monitored that how the government can face the situation and carry on their developmental processes.