Panama has long been blighted by misconceptions. When most people think of Panama, they think of the canal, hats, cigars and ‘Prison Break’. For that reason, Panama has largely remained beneath the investor radar, during which time it has actually achieved China-like growth consistently year-on-year over the past decade.

The Telegraph today highlighted Panama as being one of the world’s 20 best places to invest in property and so it would appear that the tiny Central American country’s secret is out although to seasoned investors, this will not come as a surprise.

Panama sticks out like a sore thumb from its Central American neighbours, drawing comparisons with China due to its annual 8.5% GDP growth over the last decade. Inflation is steady at a moderate rate of 4%, largely because Panama uses the US dollar as its currency, meaning the government can’t print money.

Canal Leveraged to Transform Panama into Financial Hub

Panama is clearly most well-known for its canal which provides easy passage for container ships between the Pacific and Atlantic oceans and contributes significantly to the country’s GDP. The importance of the canal will be greater when a $5.2bn expansion project is completed and the waterway’s capacity is vastly increased.

The Panama Canal has been very successfully leveraged to transform the country into a regional financial and corporate hub and a magnet for foreign investment. Panama has 92 local and international banks with a combined $78.3bn of assets as of July 2013.

More than 100 multinationals use the capital, Panama City as their regional headquarters for Latin America including blue-chips such as Japan’s Isuzu Motors, Dutch electronics giant Koninklijke Philips, Swedish telecommunications equipment maker Ericsson and US insurer Ace Group.

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