When Panama first shut down the country because of the pandemic in March, many businesses were closed and there was a very strict lockdown for several months with limited mobility for everyone. During the lockdown, only essential businesses like hospitals, grocery stores, pharmacies, banks, and gas stations were open. Some restaurants were open for take-out or home delivery service only.
Now, most businesses are open again and the only movement restriction we have is a curfew from 11 pm to 5 am. Tocumen International Airport opened for tourists in October. Malls are open. Restaurants are open for dine-in service. Gyms, beauty salons, barbers, and even spas are open. Beaches are open too.
Life is pretty much back to normal except you must wear a mask everywhere in public.
The pandemic has caused severe economic problems for many businesses and countries. Some countries, like Panama, are doing better than others. My friend Bob Adams (Retirementwave.com) keeps a pulse on what’s happening with Panama’s economy then writes a report once in a while. I have permission to share his November report below. Bob has written articles about Panama for many prestigious magazines like Barrons.
When you are researching which country to relocate to, it is important to investigate the strength of their economy too! Read this report to see how well Panama is doing despite the pandemic.
Update from Panama
Life moves on here in Panama. We have opened nearly everything and we are having guests arrive from all over the world, if in small numbers at present. This will build over time, assuming the pandemic’s latest surge in the north will subside. Predicting a pandemic’s future course is beyond our capability, but we can still hope for the best result. For now, we see no dramatic upswing in infections. We have been warned to expect one eventually as the winter brings down “snowbirds” from the north and the holiday season opens. Both good points, but we will try to work through them successfully.
In my last Report from Panama, I stressed two factors which I believe are critical to the recovery of any nation during and after the pandemic – access to money and stability.
By “stability”, I do not mean the artificial stability provided by a dictatorship, but the genuine stability of a democracy with many opinions, but always a sense of common goals. It is the kind of society that rallies in the face of an external threat like the pandemic and confronts it as one people. Panama continues to be that kind of society.
I had friends visiting from the US recently. They were really surprised to see people walking down the street with facemasks on. On the street! Yes, that is true. I put on my mask whenever I go out because, beyond being 75 with less-than-perfect lungs and with no desire to die of a virus, I know everyone else will be wearing them too and they will expect the same from me. For now, a mask is just a piece of clothing that we all will be happy to give up, but we will be the judge of when that happens and we have judged to leave them on for now.
As for money, no one, including nations, ever feels as if they have enough! However, nations are taking on debt in the drive for recovery. Thankfully, Panama has a much lower debt level than many other nations, including the US, Canada, many European nations, other Latin American nations, and more. Combined with bonds with investment-grade status, Panama has no trouble selling bonds when it needs to raise cash.
As just one example, Panama recently went into the market to raise one and a quarter billion dollars ($1,250,000,000). The demand was great. As a result, it is paying precisely 2.252% interest due in 2032. Two and quarter-percent for that kind of money is something most Latin American nations can only dream of!
Our good neighbors in Costa Rica face a dramatically different situation. They lost control of their financial situation several years ago and their bonds are rated as “junk bonds”. Costa Rica’s government spends far more than its income. The pandemic has made this much worse and they are unable to raise money in the open market at any rate they can afford. They were already over 10% on a ten-year bond pre-pandemic.
Recently, they approached the International Monetary Fund, often referred to as the “lender of last resort” for nations in severe financial trouble. In order to get low-interest loans, they had to prepare a financial plan to demonstrate how they would return to financial stability. The current administration prepared a plan, but the legislature and much of society rejected it as too painful. They have been unable to come up with any plan. They have their own currency, the colon, along with the US dollar and now they have been reduced to raising money in colones within Costa Rica. It is nowhere near enough and it is dollars or another major currency they need, not the one they print for themselves.
Why do I bother mentioning this? I have been following the Costa Rican situation with concern for years and said nothing. There are no negative impacts for us, other than a possible arrival of our next-door neighbors looking for jobs, but we will do our best for them. They are good people.
However, in recent years, I have been somewhat surprised at the number of expats with extra resources who have put that money into private bonds from Costa Rica sold through some Panamanian banks. They have exceptionally high interest rates. I am speaking to those readers now. Be sure you know exactly what and who “guarantees” your returns on your investment. Be sure there is no clause in the agreement allowing anyone to pay you in colones rather than the dollar. Enough said. Your call. For everyone’s sake, I hope all goes well.
Okay, moving along, how is Panama doing?
Keeping Body and Soul Together
The title is from three centuries ago. It was based on the soul giving life to the body, but today it typically means simply making a living, “getting by”, surviving. Well, Panama is keeping body and soul together.