Crisis will affect Panama

He believes that Panama’s position is not as strong as many believe for 2009.

According to Fernandez the principal disadvantages of the country are the deficit and over-borrowing, which currently is at 11.5 percent. “There should be a wake up call, the fact is that we are going to grow less.”

He added that it is important to attract direct foreign investment. “For 2009 we need attract around $2.2 billion and for 2010 $2.4 billion. The reason is that credit is going to slow down and the revenues from commercial exchange are going to diminish because of less demand and the restrictions the rich countries are going impose on trade.”

Fernandez said that “in 2009 and 2010 we are going to see an important movement against commercial globalization. Trade is going to close down, as well as the United States and the European economies and that is the reason way we are going to need our own resources.”

However, not everything is doom and gloom. In the horizon there are big investments such as the widening of the Canal of Panama, new port projects and the new telecommunications companies coming in are going to help to level the situation.

What could be considered like a negative element, could also be positive. The local banks are facing limitations to get access to international credit, which forces them to be more conservative.

The financial advisor, David Saied said that this situation will oblige them to adjust the rates in favor of the clients who have better possibilities of making payments.

Saied thinks that the level of borrowing should not surpass economic growth and questioned policies of increasing credit to give a boost to the economy of a country.

In the case of Panama, Saied warned about the high level of borrowing and the excessive flexibility of the requirements to obtain credit, but he does not doubt about the solidity of the Panamanian banking center.

“The Panamanian banks need to learn how to say no to bad clients and only lend to the good ones,” said Saied.

Other experts in the forum forecasted that it will take at least two years for the world to get over the crisis and go back to normal and everybody agreed that the global economic meltdown will touch Panama in the near future.