Two articles in the economic section of La Prensa this morning are portends of what the future holds for Panama in 2010. One is titled "Inflation could soar in 2010" and the other is "Public debt swells". The inflation is mostly blamed on the new minimum wage increase and the increase in public debt is past and future commitments for government spending. Of course government economist predict growth and increased revenues. We all have budgets and we all want to be optimistic about the future, but everything depends on sales derived from private businesses. Without growth in sales of goods and services income to the state will decrease relative to spending rather than grow as they plan for.
Although many see the world coming out of recession and increased growth for 2010, I am ever the contrairian , and believe we have a long way to go before we see growth. Therefore I expect 2010 will see increased burdens put on private enterprise due to lower overall sales of goods and services.
Inflation could soar in 2010
Wilfredo S. Jordan[email protected] [email protected]
Three factors this year could cause an increase in the cost of living for Panamanians: the minimum wage increase, the rising cost of energy for trade and industry, and a rise in raw material prices .
These three factors would impact directly on the price of food and service.
The minimum wage was increased from 31 to $ 95 from 1 January. On average, the minimum wage was between 349 and $ 416 per month.
According to Francisco Kiener, president of the Union of Industrialists, for a company of 200 employees this represents an increase of 14 thousand dollars, that cost will be transferred to the consumer.
The same will happen with electricity, which experience an increase between 6% and 9% from the first half of 2010 for those who consume more than 500 kilowatts, due to rising oil prices that reached $ 80 a barrel at the close of 2009.
Some commodities have increased in price by increasing demand or increased transportation costs, driven by rising oil prices.
According to preliminary estimates from the Ministry of Economy and Finance, in 2009, inflation reached 2.5%, well above the almost 0.9% was recorded in 2008. And according to William Chapman, a partner at the consulting Indesa, inflation could be placed at 3.5% this year.
The private sector projections contradict the president's announcement, Ricardo Martinelli, who in his last speech, on the occasion of the installation of the ordinary session of the National Assembly, reiterated that he proposes to reduce the basic family basket, primarily in four product Basics: rice, chicken, milk and beans.
Public debt swells
inerva bethancourth
[email protected] [email protected]
Put in check the growth of public debt remains one of the challenges of governmental authorities. The latest figures 31 October, reflecting an increase of 6.7% over the year end 2008.
The statistics of the Comptroller General of the Republic show at 31 October 2009 that the public debt amounted to 11 thousand 142 million dollars while the same period of 2008 it reached the 10 thousand 437 million dollars.
The positive note in this growth is that the ratio of gross domestic product (GDP) and total debt has gone down to settle at a 45.3% (24 thousand 574 million dollars) as of 31 October 2009, when in 2005 speaking from 66.4%.
Local economists warn that the debt reduction is not achieved in the short term, alternative measures are required.
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