Panama’s economy grew 8.9 percent in the third quarter from the same period last year, as massive infrastructure spending continued to buoy one of Latin America’s fastest-growing economies, the government statistics agency said on Friday.
Growth picked up from the second quarter, when the economy expanded by an upwardly revised 7.7 percent.
The rapid growth was spurred by ongoing spending on the $5.3 billion expansion of Panama’s namesake canal, which began in 2007, and the $1.8 billion construction of Central America’s first metro system, expected to open in early 2014.
Large government projects also include the cleaning of the Panama Bay and the building of new hospitals and roads.
The construction industry expanded by 35 percent in the July-September period, picking up 10 percent from the second quarter, the agency said.
Growth was also boosted by the ongoing construction and development of a $6.2 billion copper mine on the country’s Atlantic coast, helping to expand the mining industry by a third for the quarter.
Expected to become one of the world’s biggest open-pit copper developments and Panama’s biggest source of exports, the mine’s first shipments are due in 2016, according to Minera Panama, a subsidiary of Canada’s First Quantum Minerals Ltd .
Logistical and transportation services linked to the canal have expanded over the past six years as Panama has positioned itself as a regional hub.
Growth in the transport and communications industry accelerated 11 percent in the third quarter, the agency said.
One of the fastest-growing economies in the world, Panama mostly evaded the global recession, expanding by double-digits for four of the past six years.
But growth, while still high, is expected to slow slightly.
Panama’s Economy Ministry expects overall growth of 8.5 percent in 2013, while the United Nations Economic Commission for Latin America predicts annual growth of 7.5 percent.
The worldwide economic slowdown has dampened trade through the canal and ports, partly due to a delay in the waterway’s expansion, now expected to finish by mid-2015.
That persuaded shippers such as Danish oil and shipping group A.P. Moller-Maersk to use alternative routes from Asia such as the Suez Canal, which fits bigger ships carrying more goods cheaply.
The sluggish canal and port activity that has defined the year continued in the third quarter, dropping about 2 percent.
Panama’s economy has also been affected by a dispute with two of its biggest trading partners, Colombia and Venezuela, which has disrupted Panama’s Colon Free Trade Zone, the world’s largest duty-free area after Hong Kong.
Venezuelan traders owe the free trade zone about $1.2 billion because of difficulties exchanging the Venezuelan bolivar for dollars. Meanwhile, Colombia has imposed additional surcharges on importing items such as clothes and shoes.
Activity in the free trade zone fell 7 percent in the July-September period.
February 19, 2015
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