Panama set for tpa boost?

Investors are keeping a keen eye on the TPA spat between Panama and the USA...…

Over the last few months, the Bush Administration has been applying pressure on Congress to approve free trade agreements with Panama, Peru, Columbia and South Korea. The U.S. and Panama signed the Trade Promotion Act (TPA) in June last year and it was ratified by Panama in July 2007.

Despite the current pressure on Congress from the Bush Administration it is unlikely the agreement will be signed before September, as there is a major stall: The President of Panama's Legislative branch the National Assembly is wanted by the U.S. in relation with the death of a U.S. soldier in 1992, and it is highly unlikely that Congress will ratify the TPA until his term ends in September this year.

However as that is the only thing stalling the agreement it is likely that the agreement will be ratified in or shortly after September. America is so keen to open up its trading channels with the world's emerging markets, as America's continually expanding export industry has offset the housing market correction. Continued export growth is highly necessary to avert fears of a U.S. recession.

Increased stability

The agreement will do no end of good to Panama's emergence as a property investment hot-spot. Liam Bailey of David Stanley Redfern, commented: “Property prices in Panama City have gone up by 50% in just under 2 years, putting capital appreciation at a strong 25% for the past two years.

“The economy is currently seeing major growth in tourism and real-estate sectors, with GDP growth reaching 9.4% in the first three months of 2007. The TPA will increase the economy's stability and make it a safe country to invest in”.

“Increased stability in a time of such massive growth is the best thing an economy can hope for, and even better for Panama when viewed in the context of the canal expansion to be completed in 2014, which is likely to see GDP growth in Panama increase by 25% - maybe more.

Panama ‘equivalent to Spain’

Mr Bailey added: ”Panama currently has the highest GDP per capita in South America, but the wealth is very poorly distributed in the country, and there are high levels of unemployment and poverty. Nonetheless and even without the agreement, for American's Panama is the equivalent to Spain, and more U.S. residents are buying their second homes, holiday homes and retirement homes in Panama than any other country in the world.

”Hilton Hotels and Donald trump have both built sky-scraping hotel complexes in Panama City, and rental yields are among the highest in the world: 10% average and reaching 18% on smaller properties.

”If the TPA is approved by Congress in September, and the canal expansion goes to plan, Panama could be well on the way to becoming one of the world's strongest economies.