Panamanian economy is sound

“The country offers banking, maritime and commercial services and what is being affected most in the world are industries, where thousands of job losses have occured,” said Cohen.

Talking about the banking sector, Cohen said that the conservative attitude of the Panamanian banks has helped them to stay afloat.

“They never took over high risk mortgages and therefore they are not having the same problems that other foreign financial institutions are going through at the moment.”

According to Cohen, if anything the Panamanian banks are becoming even more conservative, to the point that they are not giving 20 years mortgages to foreigners instead are cutting the term to ten years, which makes payments higher.

“They do not want to take risks with foreigners, unless the prospective borrower has a regular monthly income and other ties to the country,” said Cohen.

In his analysis, the Capital Bank president explained that that is the reason why the construction sector will be hit by the current financial crisis, because banks would not be willing to finance housing mega-projects directed to foreign investors such as the skyscrapers of Punta Pacifica and Balboa Avenue.

The main reason for that is that investors will not have the same liquidity that in the past and many cannot afford them anymore.

However, those directed to the local residents would continue to progress steadily.

“Panamanian banks are feeling the pinch, due to the lines of credit they have with other financial institutions in the United States and Europe, which have decided to call their loans back in an effort to keep afloat,” he said.

The banker thinks that although there is a financial global crisis, multinationals are still considering Panama a good bet and although the growth for the economy in 2009 might only reach 6 percent, it would be higher than any other country in Latin America and the inflation would go done to 7.5 percent.

“All in all Panamanian economy is in good shape and will continue to grow.