Sharp drop in foreign direct investment
PANAMA. Foreign direct investment (FDI) flows to Panama dropped 31 percent to $387 million compared to $562 million in the first quarte...
PANAMA. Foreign direct investment (FDI) flows to Panama dropped 31 percent to $387 million compared to $562 million in the first quarter of 2008, said financial services firm JP Morgan, as reported by Latin Finance.
According to JP Morgan analysts, the decline is due to a considerable reduction in the reinvestment of profits by foreign banks and companies operating in the country.
JP Morgan also said if the trend continues the FDI tally for 2009 will be significantly lower than the $2.3 billion annual average posted during the past three years.
“A sizeable drop in FDI inflows would adversely affect the country’s growth potential and its ability to finance its trade imbalances,” said JP Morgan.
FDI inflows have been a key contributor to Panama’s high growth levels of recent years. They totaled $2.4 billion (10.4 percent of gross domestic product, GDP) in 2008, increasing 25.9 percent from $1.9 billion (9.8 percent of GDP) in 2007.