2013-09-18 09:04:27 - New Transportation research report from Business Monitor International is now available from Fast Market Research
After a robust double digit expansion of 10.7% in 2012, we forecast 7.8% real GDP growth in 2013 and 7.0% in 2014, due to slowdowns in the commercial and transportation sectors in the face of weaker Venezuelan and Colombian re-export activity. Panama's economic activity index readings have thus far reflected our view, averaging 6.8% year-on-year (y-o-y) through the first five months of 2013.
Uneven infrastructure development and difficult weather conditions may also act as an obstacle to investment in Panama's less-developed regions. Indeed, while we have seen substantial development in the province of Panama, other regions have received less attention. Even in neighbouring Cocle, which has seen a building boom in recent years, infrastructure development has not been sufficient to meet
demand, which is a knock to the country's freight industry.
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After Panama's current account shortfall shrunk dramatically in 2012, we forecast the coming years will see a modest pickup in nominal terms, though a further narrowing of the deficit-to-GDP ratio. The country's services trade surpluses are likely to remain sizeable. Not only do we expect Panama to continue benefitting from growing tourism revenue, but canal-related inflows are also likely to keep services exports strong.
Indeed, our Freight & Shipping team has highlighted that throughput will remain robust and sees potential for a further uptick in tolls (see 'Canal To Support Freight Transport Sector', February 28).
Annual tonnage throughput for the ports of Balboa and Manzanillo is set to remain healthy this year (at 7.06% and 5.09% respectively), while the Panamanian air freight sector will see a slight decrease in y-o-y growth terms to just over 6% in 2013, down from 2012's 6.69%.
Headline Industry Developments
* 2013 air freight tonnage is set to grow by 6.01% in 2013, to 130,300 tonnes.
* 2013 tonnage throughput at Balboa is expected to grow by 7.06% to reach 27.29mn tonnes.
* 2013 tonnage throughput at Manzanillo is forecast to grow by 5.09% to reach 14.61mn tonnes.
CHEC Wins US$66mn Contract To Expand CCT - Chinese company China Harbour Engineering Company (CHEC) put pen to paper to a US$66mn contract relating to the expansion of Evergreen's Colon Container Terminal (CCT) in Panama, it was reported in early August 2013. The expansion work includes the building of 347m of additional quay and an 8.5-hectare-container yard. The construction work is scheduled for completion in 23 months. The expansion project will increase the CCT's capacity to 1.5mn twenty-foot equivalent units.
Nicaraguan Port Could Erode US Power In Region - A senior Latin American analyst has warned in a report that the proposed US$40bn interoceanic canal in Nicaragua could threaten the US' status quo in the Central America region. In August 2013, David Franco of Maplecroft stated that if the mooted project, which would be a major rival to the Panama Canal, gets the go-ahead then it will have 'farreaching and geopolitical implications'.
Lock Gates' Arrival Boosts Canal Expansion - The Panama Canal expansion will be 60.4% complete following the arrival of its third set of new lock gates in August, according to The Panama Canal Authority (ACP). Dredging and widening of the Atlantic and Pacific access channels have been completed and both entrances are now ready to handle bigger ships, ACP added. The third set of locks will be unloaded in the waterway's Atlantic side. The new lock complexes will include three chambers, three water-saving basins per chamber, a lateral filling and emptying system and rolling gates.
Risks To Outlook
Potential risks to the downside presenting themselves through the mooted Nicaraguan ports project have been brushed off by the Panamanian government. Speaking to the BBC, the Panamanian chancellor, Fernando Nunez, dismissed the proposals by Hong Kong-based developer HK Nicaragua Canal Development (HKND) Investment that would see a US$40bn interoceanic canal completed by 2019, rivalling the Panama Canal. Nunez stated that it would be 'easier to reach the moon than build a canal in Nicaragua'.
The CEO of HKND, Wang Jing, explained that he was '100% certain' that construction work on the project would begin in earnest in 2014, while a pre-feasibility study for the project has already been conducted by Royal Haskoning and Ecorys.
With the Panama Canal expansion now more than 60% complete, the signs are positive going forward, with Panama Canal Administrator Jorge Ouijano stating at the end of July 2013 that the expansion work will 'enhance the value of the Panama route'. Ouijano added: 'We are focused on the Third Set of Locks project, which is one of the key projects of the Expansion Program.'
In a statement, the Panama Canal Authority said: 'Today, Panama has highly efficient port terminals in the Pacific and the Atlantic oceans, as well as an interoceanic railroad and two strategically located free-trade zones. The region's most important air transportation hub is rapidly integrating this logistic hub.'
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