No Recession Yet… Keep Looking!

Panama is doing well during the worldwide recession. In 2008 as the world´s major economies were contracting Panama grew its gross domestic product 9.2 percent. As workers were laid off elsewhere, Panama added jobs in 2008. In 2009 Panama looks to be growing its economy at somewhere between 3 and 5 percent. Despite rumors to the contrary construction is still continuing, even on high rises throughout Panama City. There is no widespread unemployment in this Central American country. And rental properties are in high demand as many highly employed experts in various fields come to help Panama grow. Hotel rooms vacancy is less than 10% and that is in the off season.

Tonnage passing through the Panama Canal looks to be down about 3 percent compared to last year. However, the Panama Canal Expansion is going forward with the awarding of a contract for the Panama Canal Locks for the “third lane” of the Panama Canal in June or July.

The current locks are 304.8 meters long by 33.53 meters wide. This was the maximum size of a US warship in 1914. Today a boat that just fits the locks is a Panamax. Because there are many larger vessels these have not been able to transit the Panama Canal. On the Asia to USA route these vessels currently dock on the United States West coast.

The new locks are planned to be 427 by 55 meters and will accommodate a substantially larger percentage of ocean going vessels. Thus a substantial portion of cargo going to the East coasts of both North and South America is expected to transit the Panama Canal once the expansion project is completed in 2014.

With the election of a wealthy businessman, Ricardo Martinelli, as Panama´s new president one can expect the pro business, pro investment environment in Panama to continue.

Easy residency requirements
Panama continues to have easy residency requirements for those wishing to make their home in the tropics and residency includes many savings including 25% on flights originating in Panama. One can obtain residency in Panama with a pension of $1,000 a month plus $250 a month for each dependent. As the housing market has cooled off somewhat, prices for a Panamanian home are extremely attractive, even compared to the depressed market in the United States, with exemptions from property tax making them extremely attractive. As the worldwide recession starts to resolve, real estate in Panama will again begin to appreciate whereas markets such as the United States may remain depressed for years to come.

People looking to live on a budget will easily find homes and a lifestyle in Panama that they could not otherwise afford and gaining residency is relatively easy. If they want to start a small business, there is lots of opportunity. If you have a little money invest in an existing business and rent while you earn a great income. There are even apartments where you can “rent to own” but this situation is unlikely to last long.

We reiterate our recommendation that those who are looking for real estate or investment opportunities in Panama are here at the right time. The high end of the real estate market will likely remain in “pause mode” for some months and then regain momentum. A wise investment at this time in Panama residential or commercial property, or a small business will reap rewards for years to come.

As all good investors know. Buy when everyone else is fearful.

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Minimal Risk Real Estate Investing

Here we are nearly half way through 2009 – and the World’s economy has slowed to a crawl – and Panama’s real estate market is struggling.

Gone are the days when developers only had to announce a new building’s launch…and they would be swarmed by people running cash in hand to put down a deposit. Today there are far fewer buyers and even those wanting to buy can’t always find financing. We have a Chinese dilemma: is it opportunity or is it danger?

Sooo should one invest in the Panama real estate market at this time? If “Yes” where and how?

Simple – buy pre completion construction.

This is not “pre launch or pre construction”…or even the “just started pre-construction”… but the “almost finished hence “pre-completion” construction.”

At this moment, the 20 year property tax exoneration is set to expire December 31, 2009. So, for builders to qualify…they must have their Occupancy Permits on their construction issued by then. As a result, people who bought at pre-launch or at pre- construction or even during construction are now going to have to be able to complete that purchase when the occupancy permit issues.

BUT… fewer buyers today are able to qualify for a local Panamanian mortgage…and the ones who were going to pay all cash when they signed their contracts in 2005 and 2006 no longer have that cash and they can’t find it. So, they need to sell.

But not only do they need to sell but they need to sell before the building is issued Occupancy Permits because if they can’t close when the Occupancy Permit is issued and the Developer says “OK Pony up” then they have to come up with the remainder or the developer will take back the rights to the apartment, cancel the contract, and keep the down payment. The prospective buyer would lose the apartment AND the down payment he or she has already paid – usually 20% – 40% of the purchase price ($350,000 purchase price means around $75,000 – $140,000 in deposit that could be lost).

Often buyers don’t realize this is happening until it is almost too late. By the time they realize they cant get a local Panamanian mortgage AND they dont have the moolah to make up the difference (60% – 80% NOT yet paid) they are in panic mode. About 4-6 months before Occupancy Permits might get issued, buyers start frantically trying to get re-sale agents to help them sell the rights to their contracts (if they are permitted to do so – some contracts won’t allow the contract to be assigned – ask your lawyer and the Contractor to see if your potential Vendor is allowed to assign the contract to you). So now you get the suite you want at the price it was two or three years ago! With more and more buildings getting ready to receive Occupancy Permits in the next 6 months – there will be plenty to choose from.

If you have money and want to buy a Condo or two in Panama, then there are some things for you to start doing now. Remember rentals are still in high demand and the hotels to take up some of the slack are still two years from completion

1. Decide what building you want to invest in;
2. Make sure the developer of that building will let you assume the contract from an existing buyer;
3. Contact as many re-sale agents as possible – see if they have an apartment for sale in the building or buildings that you want – what floor do they have suites on – what model number, etc.;
4. Get the details of the Initial Purchase..find out what their clients paid for the apartment and the amount of down payment they have made;
5. Make an offer no higher than what the client paid for the apartment in the first place-remember you are only paying to get their contract, and they stand to lose everything. So if you know someone has agreed to pay $350,000 for the suite you want and they have put in $130,000,00 as a down payment offer something less than $130,000.00 to assume that contract. Even if they get back $100,000 of the $130,000 they have given to the developer it is better than nothing which is what they will receive if they don’t sell you the rights to complete. People are looking to get a return OF their investment, or at least some of it and they are not concerned with a return ON their investment.

You, in turn, get to buy an apartment at 2005 or 2006 prices…today. If you are lucky you can even buy into some appreciation on that suite.

So remember don’t buy pre-construction buy pre-completion. You can see what you are buying, you know the Developer has the money and it will be completed and you don’t have to wait to start enjoying the benefits.

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La Pintada… A Great Place to Invest

Many times people come to a country like Panama and head to the gated communities and the new developments. However some people will look to find a great location, where they can assimilate with the people of Panama. La Pintada in the high hills above Penonome is one of those locations. It is about 2 hours from Panama City and it is farming country. Cattle and citrus crops seem to be the biggest farming enterprises. Here we also find a wonderful bed and breakfast and a great Steak House; enterprises started by expats.

As we toured the area we came across this beautiful, well tended farm. Horses and cattle seem to be what they are raising but the whole thing was attractive and tastefully managed.

I couldn’t help thinking how the farm houses and out building would make a wonderful bed and breakfast or a dude ranch. I don’t know if it is for sale, but it certainly was attractive

So bring your entrepreneurial spirit and find the place to create your dream. It may not be in a development where the prices are high. You may find a tract of land and decide you would like to set up a dude ranch or a spot where you can take people into the foothills and enjoy nature. The new government of Panama is committed to supporting and encouraging green tourism.

Your ideas and your energy will find a welcoming home.

Panama awaits

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Panama Elects a New President

Panama elects a new President

A conservative business tycoon has won Panama’s presidential election, promising to guide the Central Latin American country through the global economic recession and widening the Panama Canal.

Reversing a recent trend of left-wing victories in the region, Ricardo Martinelli won 61% of the votes polled Sunday, election officials said. Balbina Herrera of the ruling center-left Revolutionary Democratic Party secured 37% vote

Martinelli, 57, led the opposition right-wing Alliance for Democratic Change to success with 37 seats in the 71-seat National Assembly, and announced he would work for a national unity government.
Herrera’s bloc had 23 seats.

Martinelli is the owner of the country’s largest supermarket chain, now as President he wants to build ports, highways and a Panama City subway.

He also pledged to oversee the $5-billion plan to widen the Panama Canal to enable larger ships to sail through it.

Martinelli assumes office July 1, succeeding President Martin Torrijos.

Panamanians went to the polls Sunday and overwhelming elected Ricardo Martinelli as president in one of the biggest landslides in Panama’s history. Just a short year ago the current PRD government looked like they were a lock to win a second 5 year term in the presidency. However, deteriorating economic conditions, rising crime and a growing backlash to perceived corruption made the PRD vulnerable. Mr. Martinelli took advantage of these weaknesses and ran an effective campaign that resulted in a sweeping victory.

Congratulations to Mr. Martinelli and his Alliance for Change party. Panama faces many challenges in the coming years and we wish him all the best. As a successful businessman he understands the current economic climate so we expect good things in the years ahead.
One of his proposals is already generating considerable controversy and much interest

Mr. Martinelli has proposed a Flat Tax (all income over a certain threshold is treated and taxed at the same rate, usually corporations pay a higher rate than do individuals).

You may be wondering why, if Panama is a tax haven as you may have heard, why do they need a flat tax?

Panama doe actually have a law that taxes individuals and businesses that make money in Panama. If your money comes from outside the country, than there is no tax payble on it, hence the label “Tax Haven”.

Like many countries that tax income, Panama’s tax laws are getting more confusing each year. If you ask 3 accounts a question about taxes you are likely to get three different answers. A simple Flat tax can eliminate the uncertainty about taxes and what you pay and what you don’t and how is it determined etc. etc. Mr. Martinelli as a business man and investor knows only too well it is uncertainty that hinders investors, and since Panama is out to attract investors, the easier it is for them to understand what they have to pay for taxes, and the less they have to do to keep their books and calculate the tax accurately, the more likely they are to invest in Panama.

Excerpt from the WSJ:

BOGOTA (Dow Jones)–Panamanian businessman and free-marketeer Ricardo Martinelli, the leading presidential candidate, proposes to impose a flat tax system in the country if elected, his top economic adviser said in an interview.

“We want to simplify the tax code because it will reduce the informal sector and tax evasion,” Frank De Lima, Martinelli’s top economic adviser, told Dow Jones Newswires in a telephone interview.

The flat tax rate, probably at between 12% and 17% for persons, with a full exemption for revenues below a certain level, and between 18% and 22% for companies, would have a neutral level on tax.

The story goes on and as of yet exactly what Martinelli intends to do with a Falt Tax is unknown but since he has now been elected as Panama’s next President, we are likely to hear much more about his proposed Flat Tax.

Again we see this as something which should prove to be beenficial to Panama in the long run.

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Buena Ventura Beach, Golf and More, Much More

Along the Pacific about 120 kms from Panama City there is a very exclusive Resort and Development; Buena Ventura and the Bristol Hotel.  For those familiar with Panama city the Bristol Hotel is a boutigue hotel situated in the heart of the banking district and it is one of the most exclusive hotels in the world.  The owner has now taken his talents and his pride and moved them out to the beach as well.  This development has some of the most gorgeous beach homes you can find.

Or maybe you prefer something in sand tones

Whatever your style you can find a fantastic lot on the edge or one of the most beautiful beaches in the world and there you can build the home of your dreams. As the Bristol Hotel is also operating here if you do not feel like cooking, you can always call and either go there for dinner or of course they will come to your home and serve you if you prefer. Having a party, call the Bristol, catering is extremely well done and readily available.

Soon Buena Ventura will be home to a Jack Nicklaus Signature Golf Course with one dramatic hole overlooking the Pacific ocean. Of course if you rbudget is a little smaller, there are homes ranging in price from $250,000.00. For all owners there is a Beach Club right out at the edge of the ocean and you can eat there or in the comfort of your own home. DeliGourmet is already on site so your fresh healthy bread, the finest steaks you can find and wonderful deli food of all sorts are just a short golf cart ride away from your front door. Cappuccinos are fantastic and under $2

So make your reservations at the Bristol at Buena Ventura and you may never leave.

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Panama Real Estate Sells in Canada

I live at the Royal Decameron Resort in one of their golf villas. Decameron was one of the first companies to really advertise Panama heavily in Canada. Teaming up with Noli Tours from Canada, Decameron started 8 or 9 years ago to really make sure Canadians had an alternative all inclusive resort to consider rather than Mexico and the US when they thought to escape Canada’s winters. In fact there are probably more Canadians who live full time or part time in the golf villas here at Decameron then there are Americans. The rest of the owners are Panamanians who own the villas as weekend retreats and Colombians, and a variety of other nationals make up a small portion of the owners.

It is a wonderful community and there is no reason that other Canadians would not want to come and live here, or at other resorts nearby. Panama is such an affordable alternative to living in Canada, with affordable world class health care available when you need it, not when the “system” has time to give it to you.

So it came as no particular surprise wen I saw this article in the Panama Star
Panama Star PANAMA. Panaexpo 2009, the real estate fair will take place at the International Mississauga Center, in Toronto, Canada from April 24 to 26. The fair aims to show Canadians that Panama is the ideal place to retire or have a second home on the sun.

The General Consul of Panama in Canada, Gilberto A. Boyd said that the fair is the perfect platform to promote the country. Representatives from real estate agents, property developers and lawyers will be at the fair ready to give advice to prospective buyers.

The executive director of Panaexpo, Vladimir Reznik said that Canadians are very interested to invest and live in Panama because of its stability and a fair is the best way to promote the country and to be able to compete against its principal rivals, Costa Rica, Mexico and the Caribbean.

Five years ago only 17,000 Canadians came to Panama. In 2008, more than 47,000 visited the isthmus for their holidays or looking to buy property.

I know the Decameron resort, all 850 rooms of it and many of the homeowners rental units are filled by Canadians in November, December and from January into April each year. I would strongly recommend that you really come to Panama and take a really close look at all Panama offers. There may be many good reasons for making Panama at least your part time home.

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Canada and Panama

It has long been my contention, and that of many others, that the only way out of the recession gripping the world is to undertake more world trade, not less. The Canada Youth Trade Mission was one sign of the fact that Canada and Canadian businesses realize this. Too long have we limited our Canadian trading to the US, our largest trading partner by far.

For Canada, trading in the US is comfortable. They speak the same language, travel is fast and easy and they are a truly known entity. But it is a well known adage, “that when the US sneezes Canada catches a cold” but now the US has both a cold and the flu and Canada does not want pneumonia so it is time to expand our trading horizons. Free Trade with Panama has a good chance to be approved soon and both countries are making the most of this new closer relationship as you will see below.

New target to revitalize real estate
March 30th, 2009
Panama Star PANAMA. The traditional residential real estate market is slowing down in Panama and brokers are looking for clients in other areas that they previously thought were too specialized to venture into.
Now Canada has become a prime target for attracting businesses, in hopes of re-vitalizing the housing market.
The Association of Real Estate Agents ACOBIR (Asociación de Corredores de Bienes Raices) is contacting 500 companies in Canada, inviting them to visit the country and establish a branch here.
The president of ACOBIR, Osvaldo Marchena said that currently real estate agents are concentrating their efforts to attract multinational companies to Panama. Many of these economic groups see Panama as the ideal place to use as an exports platform.
Marchena said that currently due to the global financial situation many companies are looking for efficient places on which they can develop their operations. It is not until recently that officially the ACOBIR began marketing Panama’s advantages.
Initially Panama was exploiting the second home market, tapping into the needs of the baby boomers, who were looking for a place in which to pass the winter months. But, because of the global financial crisis the stream of buyers has dried up and the sector has slowed down.
Although the II Panaexpo Fair in Toronto, Canada will promote real estate developments in Panama, a new strategy was needed to run alongside.
According to Marchena the new strategy is to approach Canadian based multinationals to let them know the fiscal advantages that Panama offers in comparison with other countries in the region.
The potential free trade agreements (FTA) with Canada plays an important part to attract this group of potential buyers.
Marcena added that some multinationals are beginning to come to Panama such as Caterpillar, which at a global level has dismissed over 20,000 people, but it is still continuing with its Howard project, opening a training center for Latin America.
Dell has been here for a while and Sony also inaugurated regional training facilities.
Canada is a prime target as the Panama-Canada FTA appears to be moving along fast, and has the support of Canadian Prime Minister Steven Harper.
Marchena said that as part of the strategy ACOBIR launched a promotional campaign in Toronto, Canada and has made contact with 500 companies with the idea that they establish logistic centers here, but at the same time giving them the opportunity to create alliances with other enterprises.

“We are planning to use the same strategy in Latin America, Europe and Asia. These countries see Panama as a good place to be. For example in Tokyo the square meter for rent cost 1,600 euros, while the prices here are just a fraction in comparison.” said Marchena.
The projects that are taking place in Panama are very important, because when these groups come here they need to see a finished product, so depending on what they do there are places available in Costa del Este and Howard has already started the construction of warehouses.
“We are chasing the government asking them to sort out the infrastructure problems and to support the INADEH to train people for the companies to find the personnel they need to operate in Panama,” said Marchena.
The ACOBIR president said that another advantage of companies coming to Panama is that their executives will need housing, offices and distribution areas. Therefore if Panama only attracts 10 companies out of 500, it will have a great impact in the country.
CANADA
Panama received 17,000 Canadian visitors in 2005. In 2008, the number of visitors went up to 48,000.
The Panaexpo Fair was set up to promote Panamanian real estate in Canada.
This year, a second strategy is to encourage companies to set up shop here.

Full story can be found here:
http://www.laestrella.com.pa/mensual/2009/03/28/contenido/81062.asp

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Is Your Money Safe?

You may think I am asking this question about money in Panama and Panamanian banks, in fact I am asking the question about US banks.  Below is an article which comes from Doug Casey’s research team

Move Your Money Out of the Country… and Soon
March 30th, 2009

By the editors of Without Borders

Things are getting uncomfortable for individuals and corporations looking to deposit their money in tax havens around the world. Just recently, Congress introduced the so-called “Stop Tax Haven Abuse Act,” which is designed to do away with the privacy afforded by doing business or investing outside the U.S. and to eliminate or reduce tax benefits available offshore. Simon Black and Fitzroy McLean, ex-CIA operatives, investment pros, and globe-trotting editors of Casey Research’s Without Borders, weigh in with their no-holds-barred opinion on the topic…

We are patriots. We have proudly served in our country’s military, have extended a helping hand to its public sector, and have plowed our entrepreneurial enterprise into its once fertile soil. We love America, but these days, America does not love us back. It takes without giving and squelches free enterprise. These days, America is no longer the land of the free, especially when it comes to the market.

Just look at the headlines, seemingly ripped from the pages of Atlas Shrugged: Unconscionably large bank bailouts. Punishing regulations and tax requirements. An arctic business climate. Government money bombs. Riots and protests. Slowing trade. Protectionist rhetoric. Demonized corporate executives. Even pirates hijacking cargo ships. One can guess what will happen next.

We predict the next several years will usher in larger, more obtrusive governments, resulting in a decline of personal liberty and financial privacy. The world will become increasingly polarized between two groups: those who consider government intervention a great idea, and the rest of us who happen to be sane.

As such, you can bet your last falling dollar on some absolute certainties: bank nationalization is a given, at least de facto if not de jure; taxes are going up on those of us with any money left; the Fed’s money blitzkriegs will spark a blaze of inflation; and financial privacy will be a thing of the past in the United States.

The obvious and necessary solution is to position one’s finances outside of the United States, and to do so now, while the narrow and finite window of opportunity is still open.

To be clear, evading (or even avoiding) taxes at this point is not a wise move, given the size and scope of the ever-growing IRS. But there are significant advantages to expatriating your capital now:

For starters, you will actually have control of your own money. Yes, in certain instances you’ll be obliged to tell the IRS exactly where it is and what you’re doing with it, but no government agency will have the authority to reach into your overseas pocket and freeze or expropriate (read: steal) on a whim just so Team Obama can give it away to pay for someone else’s McMansion.  Plus, when exchange controls are implemented and Americans are forbidden from wiring money overseas, your capital will already be secured in another jurisdiction, where you will be free to do what you want with it.

Secondly, you will no longer have to assume the risk of insolvent banks or go through the hassle of petitioning the government to get your FDIC insurance bailout. Many overseas banks are far better capitalized than those in the United States, and some of them are in jurisdictions with constitutionally protected banking privacy.

Lastly, and probably most importantly, moving money overseas gives you a last chance at diversifying out of the dollar, which, in a very short period of time, will barely be worth the paper on which it’s printed.

Bank and Brokerage Accounts

Opening a foreign bank or brokerage account is easier said than done; the United States government severely restricts where and under what terms you can open a bank account, invest in a fund, or engage in other economic activities that facilitate the protection of and access to your assets. As the signatory on an overseas account, you are required by law to inform the federal government on Treasury form TDF 90.22 by the end of June each year. Ostensibly, this has been done in the name of fighting money laundering, but it has the effect of severely restricting your freedom of financial movement.

Many foreign banks simply won’t work with you… don’t worry, it’s nothing personal. Uncle Sam has been beating them down since the Reagan years, and between Qualified Intermediary rules, tax treaties, and the USA PATRIOT Act, Sammy gives himself a lot of regulation to bury the opposition with.

There are some jurisdictions that are still excellent banking centers; Switzerland may have rolled over, but Panama, Uruguay, Singapore, and the United Arab Emirates have thus far ignored the call for “greater transparency” (read: government access to private finance).

Some individual banks, like Credicorp and Global Bank in Panama, or Banco Itau in Uruguay will not work with U.S. citizens anymore, but there is still opportunity with the hundreds of remaining banks in these jurisdictions.

Similarly, opening a foreign brokerage account is a shrewd move, not only to move your money overseas but also to have greater access to financial markets. Remember when world markets tanked on Martin Luther King Day 2008? If you were a U.S.-based investor and wanted to sell, sell, sell, you had to wait a full 24 hours until the markets opened after the holiday on Tuesday morning. If you had been invested with global depository shares through a foreign brokerage, you could have saved yourself several points and gotten out in time.

We would suggest looking at Verdmont Capital and PanaAmerican Capital in Panama, and Saxo Bank in Denmark.

Bullion Storage

If you have gold, it would be highly beneficial to get it out of the U.S. – fast. If you do keep it in the U.S., your only truly reliable and private option is to store it yourself in a safe that you bury in your backyard.  Otherwise, move it out of the U.S. now before Team Obama pulls an FDR and takes your gold from you.

At the moment, gold is not considered a monetary instrument by the U.S. Customs and Border Patrol, so there is no legal requirement to declare your bullion upon leaving the United States. Some countries, like Taiwan and Uruguay, require you to declare gold in excess of a certain value to customs officials upon entry.

We recommend Panama, Austria, Switzerland, and the United Arab Emirates as locations to store bullion; one particular favorite is a location called Das Safe (www.dassafe.com) in Vienna where anonymous safes start at 400 euro/year.)

Real Estate

It might sound counterintuitive after the subprime debacle, but real estate is a sound option for moving money outside of the United States; there are zero reporting requirements. It’s your business where you own property, and (so far) no one else’s. You can purchase property in a private way by setting up a corporate structure to hold the assets so that they’re not in your name (Panama is an excellent jurisdiction to set this up), and although there are many places with depressed real estate markets, there are also many with good growth potential: in Latin America, we would recommend Panama, Colombia, Uruguay, and Chile. In Europe: Slovakia, Albania, and Poland. In the rest of the world: Lebanon, Hainan Island (China), the Philippines, Cambodia, and New Zealand.

Time is of the essence – start looking for your safe haven now.
Full story can be found here:

http://news.goldseek.com/GoldSeek/1238196153.ph

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Real Estate Boom in Panama Continues

I have been interviewing a lot of people in the real estate industry in preparation for the March Magazine and there is no doubt that the boom in real estate is alive and well. First of all in Panama there were never the excesses in the market that you saw in Dubai, in the United Arab emirates or London England or Las Vegas, Nevada and other places where the bubble exceeded all reason.  Secondly, retirement is a real issue and there are lots of people nearing retirement from all over the globe who find Panama interesting and attractive for a variety of reasons.

Many people want a second home to escape their own country at certain times of the year. In addition, many people are looking for a total change of lifestyle, in their retirement years and Panama is attractive to them. There is an incredible energy in Panama as business is still good. Many businesses from places around the world are moving here. Real estate is selling well, businesses are doing well, the banks are sell capitalized and ythere is little “sub-prime” debt except amongst the bigger international banks like Citi and HSBC.

Business in the canal and in the Free Zone is strong.  What’s not to like.

Come and see for yourself

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Panama’s Stimulus Package

Article found in The Statesman.  Panama fortuitously had a huge stimulus package organized well before it became obvious to the world that stimulus packages planned by the governments would be necessary and a good thing in almost any nation.  Whether or not it is the right thing to do only time will judge but certainly you continue to feel a buzz in Panama.  Things are still going strong and with an incredibly strong demand for rental accommodation for all the people coming to help with the canal expansion, even housing is balancing out.  As one of the developers told me, “Prices may not be going up like they once were, but they are not falling either.”

Panama hopes to beat the global financial crisis
Central American nation expects economic growth and budget surplus in 2009

By Jeremy Schwartz
INTERNATIONAL STAFF
Sunday, March 15, 2009

PANAMA CITY — Cranes hover over the skyline like futuristic insects, buzzing around half-finished skyscrapers that make Panama City look like Miami or Hong Kong.

If any country is poised to withstand the ravages of the global financial crisis, it just might be tiny Panama, which has quietly become a regional economic powerhouse in the past five years.

Fueled by a superheated real estate market, windfalls from the Panama Canal and a burgeoning banking system, economic growth hit 9.2 percent in 2008 after soaring to 11.5 percent the year before.

As nations from the United States to Japan confront shrinking economies in 2009, officials in Panama are predicting relatively robust growth of 4 or 5 percent this year.

“This global crisis arrived in a moment in which we find ourselves stronger than we have been in the past,” Minister of the Economy Hector Alexander said. “In Panama, the dominant topic isn’t the recession.”

While unemployment has soared in the United States, the unemployment rate in Panama fell from about 14 percent in 2004 to 6.5 percent last year. And as the U.S. is adjusting to life with 12-digit budget deficits, Alexander said Panama is hoping 2009 will be its third consecutive year with a budget surplus.

But the nation hasn’t been immune to the global recession. Its real estate market might be heading for a sharp downturn.

Matt Landau, a New Jersey native and Panama City investment consultant, said real estate sales have declined precipitously in recent months, especially among the U.S. and European buyers who largely fueled the boom.

“When I first got here (about four years ago), people were buying (properties) for $200,000 and then flipping them for double or more in six to 12 months,” he said. “That was happening even up to a year and a half ago.”

Now, Landau said, Panama City is bracing for a glut of high-priced condominiums.

And as global trade is pummeled by the recession, Panama Canal officials expect the number of cargo ships passing through the waterway — and the tolls they pay to the Panamanian government — to fall almost 6 percent this year.

Even there, Panama has an ace up its sleeve in the form of a $5.2 billion Panama Canal expansion, which will widen the canal’s locks to allow larger ships to pass through.

Although recession wasn’t on the minds of Panamanian voters when they approved the expansion in 2006, officials see the megaproject as a perfectly timed stimulus that will directly create nearly 7,000 jobs in a country of 3 million and spark the creation of thousands of secondary jobs, just as the economy begins to sag.

“It’s as if we are increasing public sector spending by 35 to 40 percent,” Alexander said. “Today it works as a fiscal stimulus.”

Percentagewise, the canal expansion dwarfs any stimulus project the United States is planning. The project represents nearly a quarter of Panama’s $23 billion gross domestic product. By comparison, the $787 billion stimulus package in the U.S. represents about 5 percent of America’s $14 trillion gross domestic product.

Counternarcotics officials have long suspected that Panama’s boom has also been aided by an influx of money from criminal organizations. According to the U.S. State Department’s 2008 International Narcotics Control Strategy Report, the country’s construction and offshore banking sectors are particularly susceptible to money laundering.

But Panama’s economy has been helped by a stable and peaceful political scene, which the nation has enjoyed since the 1989 ouster of dictator Manuel Noriega.

When Noriega was captured by U.S. troops, Panama’s economy was in shambles, paralyzed by an economic embargo of Noriega’s regime. Successive democratically elected administrations have focused on economic recovery, enacting reforms and privatizing sectors such as telecommunications and electricity.

But some critics say Panama’s spectacular economic growth in the past five years has left out the majority of its people.

“The problem is that the growth has stayed in a few hands,” said Rolando Gordon, a University of Panama economics professor. “The economic boom hasn’t been able to resolve any of the great social problems of the country.”

Gordon said government statistics obscure the fact that even as the country’s economy exploded, the percentage of Panamanians laboring precariously in the nation’s informal sector — doing things such as selling fruit at intersections — has risen from 33 percent in 2001 to 44 percent today.

Gordon added that public schools are underfinanced, and access to drinking water remains problematic for many Panamanians. At the same time, the price of basic foodstuffs has increased.

“This boom we’re having is tremendous,” taxi driver Jose Cano said. “But for the poor, the humble, we aren’t seeing the boom. The price of food is going up. I have my own taxi, so I’m doing pretty well, but there are a lot of people who are recycling cans and stealing scrap metal.”

jschwartz@coxnews.com

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