News

New government data shows foreign direct investment (FDI) in Panama surged again in 2016, with volumes up a robust 16 percent from a year earlier.

For the year, FDI in Panama hit a record $5.2 billion, compared to $5.5 billion in 2015. Of the total, 66.5 percent represented company profits reinvested into Panama, according to the government data. In terms of type of investment, 79 percent was in the form of investments in companies, while 7.8 percent went into the banking system, La Estrella reports.

Beyond helping to fuel Panama’s region-leading economic growth, FDI provides a strong leading indicator of global interest in Panama. More than anything, it provides a barometer of confidence in the market.

Individual real estate purchases are typically not reflected in FDI, but there is typically a direct co-relation. More foreign investment usually means more corporate growth and more executives looking to buy and rent in Panama.

Panama’s FDI growth is a sharp contrast to the results around the globe. Overall, global FDI fell 13 percent in 2016, in the wake of a sluggish world economy and low trade volumes, according to the United Nations Conference on Trade and Development. In Latin America and the Caribbean, investments were down 19 percent; FDI flows into Europe fell 29 percent, according to the group.

But the UNCTAD expects the global economy to pick up in 2017, which should result in an increase of global FDI of about 10 percent, the group predicts.