Question

What is tge rank of Panama according to the IMD and WEF competitiveness indices? What are the strengths and weaknesses of this country as a potential for international trade and investment? Identify one industry/ product that you will recommend to a potential investor willing to invest in this country?

Answer 1

1. Panama is the 66th most competitive nation in the world out of 140 countries ranked in the 2018 edition of the Global Competitiveness Report published by the World Economic Forum. In 2019, it became 67.

2. Strengths (+) and weaknesses (-)

(+) Favorable geographical location

Panama is exploiting its favorable geographical location. Due to large infrastructural investments Panama is becoming one of the most important trade hubs in the region.

(+) Long-standing monetary stability

Due to the full adoption of the US dollar, Panama does not have its own currency and central bank, which contributed to monetary stability for a long time.

(-) Corruption and rule of law

Corruption is problematic, also at the highest levels. Besides, indigenous communities are not fully protected against land bribes (for mining purposes).

(-) Lack of an educated workforce

Panama’s educational system is weak and its workforce is relatively low educated.

3. Retail Sector in packaged food( food industry)

Euromonitor has estimated that the retail sales of packaged food products reached nearly $1.9 Billion in 2018.

This is an increase of $339.5 million or 22.1% from just 4 years ago. They also forecast that the packaged food market will grow to $2.4 Billion by 2023, an increase of $444.3 million or 22.5%. There is clearly a lot of potential for U.S. suppliers of packaged food products in Panama in the next few years.

Supermarkets and hypermarkets have performed well in the past few years, and that trend is expected to continue. Many of the existing modern grocery retailers have plans to expand to other areas of the country. It is also expected that supermarkets will start diversifying and offering services such as pharmacies, wine aisles, cafeterias, etc. making them more likely to continue attracting a loyal client base. With the ongoing change in tastes and preference heading toward healthy organic produce, vegan products, etc., supermarkets are likely to face increased competition from specialty stores. So investing retail food industry will be good for higher returns.