The construction sector in Panama has continued to grow, but the rate of growth slowed down in the last two years as a result of the world economic situation. Growth is slowly increasing in 2012 again as the construction of the new Panama Canal locks is advancing. The Government of Panama is currently driving much of the activity in this sector: in addition to the Canal expansion, the Government is expanding highways, building a $2 billion Metro system, a network of hospitals, and renovating airports throughout the country. For an overview of the Government of Panama’s plans in public infrastructure – which in addition to the Canal might amount to $15 billion in investments over the next 5 years – please visit the following link: http://export.gov/panama/majorprojectsinpanama.
The majority of construction in recent years was in middle to high-income apartments and commercial buildings, but the construction activity is now concentrating on low-cost housing and high-end suburban housing, as well as infrastructure. The growth in the construction sector has been fed by retiring baby boomers from the U.S., as well as immigrants from South America and Europe. A growing demand exists for after-construction building products used for improving, decorating or modifying existing buildings. U.S. building products are well received because of their perceived quality and competitive price. U.S. products in this sector enjoy a market share of over 60%.
One area of growth that seems to be sustained is in the area of lower cost housing in the growing exurbs of Panama. Because Panama has some of the lowest interest rates in Latin America and the Government of Panama is promoting home purchase financing, middle class Panamanians can borrow against a home purchase for up to 30 years at rates as low as 5%. As a result, there is a building boom on the outskirts of the Panama metro area, where new malls are providing anchors.
Major competitors are Taiwan, Italy and Spain. There are no significant restrictions on imported products. Import duties are in the range of 5 to 15% over customs, insurance, and freight (CIF) value.
Sub –Sector Best Prospects
The demand is especially strong for gypsum board, lighting, and roofing/flooring products. The Canal project will require massive amount of cement, aggregate products and steel.
Housing projects, construction of new hotels in Panama City, and infrastructure projects will continue to generate a strong demand for building materials.