Panama’s Expanded Canal Faces a Challenging Scenario
The new locks in Cocolí, on the Pacific Ocean, have 16 rolling gates. Each chamber is 427 metres long by 55 metres wide and 18.3 metres deep. The expanded Panama Canal will be able to handle New Panamax vessels with a capacity of up to 13,000 tons, up from the current 5,000 ton limit. Credit: Iralís Fragiel/IPS
Cargo tonnage by origin and destination has remained steady over the last three years, according to the ACP. The United States remains the largest client of the canal, with a total cargo of 160.78 million tons in 2015.
The cargo traded between the two leading clients reflects this stability. From China to the United States, 10.37 million tons were shipped through the canal in 2013, 10.96 million in 2014 and 10.91 million in 2015. And from the United States to China, 24.95 million tons were shipped in 2013, 30.77 million in 2014 and 30.20 million in 2015.
Given the economic outlook in China and changes in the energy sources used, the ACP is also getting ready for traffic of liquefied natural gas carriers.
“An incursion into new areas of business that reinforce the transportation and logistics industries is being evaluated, such as the case of the Corozal port and the creation of a logistics park that would complement the operations of the expanded canal,” the ACP experts said.
Canal revenue totaled 2.6 billion dollars in 2015, up from 2.5 billion in 2014, and equivalent to 5.61 percent of the country’s GDP.
Jordi Prat at the Interamerican Development Bank (IDB) told IPS that Panama has “a positive economic outlook but not without risks.” And in the case of the canal, the United States, which it depends on most, “is growing at a relatively strong pace,” although the vulnerability could increase if the situation in China continues to go downhill.
Prat, the IDB’s principal regional economist for Central America, said the challenge faced by this country is keeping the growth rate between six and eight percent a year, and preventing a decline in maritime trade flows, fuelled by other sources of growth.
Prat pointed out that between 2000 and 2014, the sectors that grew the most in Panama were construction (37 percent), transportation and logistics (22 percent), finance (15 percent) and public services (12 percent).
Besides the economic variables, inclusion is key to development in this Central American nation of four million people, he said.
Panama managed to reduce the poverty level from 38.3 to 25.8 percent, between 2006 and 2014, said Prat. However, inequality is reflected by the fact that 86.9 percent of the population in autonomously governed indigenous “comarcas” or counties is poor.
The IDB economist said Panama should move towards “inclusive growth, by fomenting human capital, education, and access to health and basic services, in order to boost productivity, which has not increased significantly in recent times.”
Analyst Rodrigo Noriega concurs with Prat that Panama has to seriously focus on education, training and scientific research, to bolster development.
“That is where we are limping, in education, and in corruption – these are issues that in the long term definitely hurt the Panamanian economy,” said Noriega.
He said the economy may see growth slow down in 2016 and 2017, due to external factors and the impact of the drought caused by the El El Niño-Southern Oscillation (ENSO), a cyclical climate phenomenon that affects weather patterns around the world.
“These external factors could be reducing Panama’s GDP by 2.0 to 2.5 percent a year. What I’m saying is GDP could be growing between 7.5 and 8.0 percent, instead of the current 5.0 to 5.5 percent,” he said.
But he stressed that a project such as the expansion of the canal is not something that is undertaken with a short-term view, but to address the needs of the country over the next 30 to 50 years.
“There will be two slow years, but that is actually a good thing for us because right now we have a water shortage problem. It’s best if the ship traffic isn’t so heavy, because we need to recover in terms of water supply and take baby steps to learn to handle the larger vessels,” said Noriega.
Edited by Estrella Gutiérrez/Translated by Stephanie Wildes
Pictures for this story
This story includes downloadable print-quality images — Copyright IPS, to be used exclusively with this story.
- Two ships go through the Miraflores locks on the Pacific side of the Panama Canal, which raise or lower vessels 16.5 metres and take 40 minutes to pass through. Credit: Iralís Fragiel/IPS
- The new locks in Cocolí, on the Pacific Ocean, have 16 rolling gates. Each chamber is 427 metres long by 55 metres wide and 18.3 metres deep. The expanded Panama Canal will be able to handle New Panamax vessels with a capacity of up to 13,000 tons, up from the current 5,000 ton limit. Credit: Iralís Fragiel/IPS
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