PANAMA CITY: Panama's economy rose 10.4 percent in the second quarter of the year from the same period in 2011, boosted by government spending on infrastructure and the expansion of the Panama Canal, the government statistics agency said on Friday.
The $5.3 billion canal expansion and building of a $1.8 billion subway, Central America's first, drove much of the growth in the quarter, the agency added.
Panama, a tiny nation of 3.5 million, also got a lift from widespread private construction, foreign investment, international trade through its canal and ports, and the Colon Free Zone. Its well-developed service sector accounts for more than three-quarters of its GDP.
During the quarter, the construction industry grew 29 percent, the result of the flurry of public and private development, spurring a 29.6 percent growth in mining as demand for materials increased.
Retail rose 14.3 percent and sales in the Free Zone grew by 5.8 percent.
Analysts say last year's remarkable growth, when Panama's economy expanded 10.6 percent, will slow slightly this year. They expect the economy to grow 7.5 percent in 2012.
However, inflation continues to hover around 6 percent, clocking in at 6.1 percent in August, half a percentage point more than in July, the government reported earlier this week.
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