There are some countries that are promoted as expat retirement destinations that will only succeed on a wing and a prayer, and do not have a sound economic foundation. There are pluses and minuses for retirees living in a country, like Panama, with a booming economy. Compare, for example, Panama and Costa Rica. Both are spectacularly beautiful countries, neighbors, both neutral, and neither with an army. Costa Rica stands alone, and it knows it, but hopefully should the military need arise, can count on assistance from other countries in the Americas who do have armies. Panama has the second Carter-Torrijos Treaty in which the US guarantees to protect the neutrality of the Canal, and ipso facto in this tiny squiggle of a country, the neutrality of Panama in perpetuity. Big difference.
Panama, like Ecuador and El Salvador, has a dollarised economy, meaning that our currency, although called the Balboa, is in fact the US dollar. [If I were President of the Republic of Panama I would use three currencies, the US dollar, the Euro, and the Balboa as a separate, totally Panamanian currency. I’d nationalize Panama’s gold mining and hang onto all the gold to back the Balboa with gold. And I would keep the Balboa as a totally private currency only held and traded in Panama. I think you would see billions of foreign dollars flood into Panama.]
Because we use the US dollar, as the US dollar has been devalued and prices have gone up in the US, they have also gone up in Panama. Obviously this is cause for concern for retirees living on fixed incomes. But, for us, since prices have also gone up in the US, we still live far better for less in Panama.
In my mind the benefits of living in a country which uses the US dollar far outweigh the disadvantages. There is a stability of currency that other countries, like Costa Rica which has its own currency, do not enjoy. We don’t have the wild fluctuations that often characterize Latin American currencies. Even with its ups and downs, the US dollar is still considered world-wide to be one of the best and most secure currencies.
Panama has a booming economy. During periods when many countries in the world were lucky to proclaim 1 or 2% GDP growth, Panama was averaging 5.5% GDP growth. A lot of that is because of the Panama Canal, the centerpiece of Panama’s strong economy. But Panama, unlike some neighboring countries, is not a one pony show. The Canal is only one piece of the economic pie. 25% of the world’s ships are registered in Panama. The Colon Free Zone is the second largest free zone in the world. Panama is a Latin American banking center with over 80 international banks. Many of the world’s best-known companies are registered in Panama. Panama is the center for regional distribution. And the Canal does not stand alone but is surrounded by huge ports, has bunkering facilities, and is a strategic distribution center for many international companies.
The saying is that “nothing succeeds like success” and to an extent that is true economically if the economic success is built on sound fundamentals. There is something to be said about living in a country with a optimistic and positive view of its future. When countries, like people, stop growing they start dying.
There’s a good web site that has a lot of economic information about Panama and other countries called The World Folio.
I happen to like Costa Rica and I love “Ticos,” the self-given name to the people of Costa Rica. I’ve been frequently to the Costa Rican ports, Puntarenas on the Pacific, and Puerto Limon on the Atlantic. Both ports are, IMHO … well, let’s just say that Puerto Limon (“Lemon Port”) is a lemon of a port, as is Puntarenas, BUT both ports are the jumping off place for fantastic tours into the interior of Costa Rica. Costa Rica is Panama’s neighbor and in fact I live in Panama only 40 km as the crow flies from Costa Rica. It’s just that for us, and for many, Costa Rica just isn’t a good place for expats or a place to retire. There are many reasons for that, but at the base is the struggling economy of Costa Rica vs the thriving economy of Panama. Costa Rica has been a one pony show. OK, a couple of ponies — computer chips, bananas, and tourism. Yes, and they do grow coffee, actually some very good coffee. But the exciting pony in the show was computer chips, in fact computer chips, not bananas, were Costa Rica’s #1 export. But last year Intel, the giant computer chip manufacturer, announced plans to pull out of Costa Rica, yet another blow to Costa Rica’s faltering economy.
Costa Rica made our final list. And when I analyzed the countries on the list, and you can read all about this process in THE NEW ESCAPE TO PARADISE: OUR EXPERIENCE LIVING AND RETIRING IN PANAMA, Costa Rica wasn’t any better, given what we were looking for in a place to retire, than where we were living at the time in Ventura, California!
Jackie Lange, who actually read my book before moving to Panama, and now runs Panama Relocation Tours, shared Panama vs. Costa Rica …
For two years, I’d researched where to move to that would have affordable costs and great weather (no air conditioning). I’ve been all over Europe, Canada, South America, the Caribbean islands, Mexico, and in February I visited Panama. As soon as I discovered Panama I really felt it was THE place. But I kept reading about how great Costa Rica was and saw Andy Brown’s videos about Costa Rica so I decided to check out Costa Rica.
There were 4 things that turned me off to CR right away:
1. Crime is a huge problem. Everyone we talked to said they could not even go to the grocery store or out to eat unless they got someone to stay at their house. Who wants to live like that?! A guy I know in Escazu (who used to live in Grecia) had been broken in to 3 times in the last 12 months.
2. Even with no air conditioning, the utility costs are extremely high in Costa Rica, at least 10 times higher then Panama
3. Food costs were 50% more in Costa Rica for the basic items I compared.
4. Housing costs, including rents, were much higher..
I actually cut my visit to Costa Rica short because I quickly determined that it was OFF THE LIST.
Panama is much more affordable. On my first visit, I ran in to three couples from Costa Rica who came to Panama to stock up on items from PriceSmart because the prices are so much cheaper in Panama.
Each time I visited Panama to check it out I discovered that everyone is friendly and helpful – both expats and Panamanians. There are many community activities to be involved in and you feel right at home in Panama.
The last thing we all want when we’re in retirement mode is to worry about money. The economy is strong in Panama and that helps to keep inflation down – you can read about the Panama economy at Bob Adam’s site www.retirementwave.com
Come learn what life would be like living in Panama during a Panama Relocation Tour!
I know nothing about these guys at VIVA, except that they make a good graphic and making it readily available is a good way to get a link to your site. And by the way, I’d agree with their dots.
*”It’s the economy, stupid” is a slight variation of the phrase “The economy, stupid” which James Carville had coined as a campaign strategist of Bill Clinton’s successful 1992 presidential campaign against sitting president George H. W. Bush.