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Panama: Country risk summary
(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY VIEW
FROM THE ECONOMIST INTELLIGENCE UNIT
Panama: risk assessmentSovereign riskCurrency riskBanking sector riskPolitical riskEconomic structure riskSeptember 2007BBBBBBBBBBBBSovereign risk
Stable. The nominal public debt stock will continue to increase as the government borrows to finance investment spending. However, barring any unexpected external shocks affecting world trade growth, robust GDP growth in Panama will continue to see public debt ratios improve.
Currency risk
Stable. Dollarisation has underpinned price stability, but moderate fluctuations in the US dollars value against other major currencies has not affected Panamas competitiveness significantly, owing to the nature of its services-based economy.
Banking sector risk
Stable. Panamas fully integrated banking system is strongly capitalised and highly liquid. However, there is a risk of a rapid expansion in mortgage lending, leaving the sector exposed if the current construction boom proves overly speculative.
Political risk
Broad consensus among political parties on the importance of an economy open to trade and foreign investment minimises the risk of a deterioration in Panamas attractive operating environment for foreign companies.
Economic structure risk
A structurally large current-account deficit, reliance on Canal revenue and a heavy public debt burden will continue to weigh on economic structure risk.
The Country Risk Service (CRS) provides sovereign credit risk analysis for 120 developing and highly indebted countries. CRS is distinct from our Risk Briefing service, which analyses a broader spectrum of risks relating to the operating environment.
Copyright 2007 Economist Intelligence Unit
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