Best Places In The World To Retire

For me, personally, being a mother moving to Belize, I was very pleased to find out that Belize was a community that was accepting of me as an expat. I never left the US for any other reason than I just wanted something different, which included a change of cultural experience for my children. I can say that that was an incredibly wise decision. My kids have benefited from seeing other cultures and how they live.

 

Belize is so diverse, we are talking about many...

For me, personally, being a mother moving to Belize, I was very pleased to find out that Belize was a community that was accepting of me as an expat. I never left the US for any other reason than I just wanted something different, which included a change of cultural experience for my children. I can say that that was an incredibly wise decision. My kids have benefited from seeing other cultures and how they live.

 

Belize is so diverse, we are talking about many different cultures: from the Mayans, to the Mestizos, the Spanish, the Belizeans, the Garifuna, the Creole, etc. There is everything here in Belize.

 

Living in Belize is like living in a global world, but with a very small town feeling. That is what the whole country feels like.

 

(Macarena Rose in San Ignacio in the Cayo district of Belize talking to bicyclist downtown, pictured.)

Reprinted with permission from Bob Davis, of Retirement Wave.

 

 

"Common sense is not so common."-- Voltaire (pen name for Francois-Marie Arouet), French writer and philosopher

 

In the past, I have devoted a couple pages to discussing the rest of the world and its situation. After all, Panama is part of the greater global community of nations, so it is also concerned with what is going on...

Reprinted with permission from Bob Davis, of Retirement Wave.

 

 

"Common sense is not so common."-- Voltaire (pen name for Francois-Marie Arouet), French writer and philosopher

 

In the past, I have devoted a couple pages to discussing the rest of the world and its situation. After all, Panama is part of the greater global community of nations, so it is also concerned with what is going on globally. But frankly, it is not worth the time. Much of the world today is going through difficult times and they have been for years now. The lack of consensus in the US and Europe is especially obvious. Things are not too good in much of Latin America as well. No one knows what path these nations are going to take and they have no consensus on where they should go anyhow. So until they finally determine their future direction and have general long-term support among their peoples to move forward, we have to get on with our lives down here. And we are doing just that. After all, there is nothing we can do to help them make up their minds. Every nation has to do this itself.
 
My one comment this time is one I have made before. If you are coming from a nation that is severely divided and in search of direction, we sympathize, but please do not let your problems "back home" interfere with your life in Panama. Remember that it is not where you are "coming from" that is important; it is where you are "going to" that counts. It takes time to adjust. It certainly took me time, although I have done it before. It always takes time, but it happens if you truly want it to happen. A simple word for it is "transition". When we make that transition, wherever we go, we can still love our old home nation, but focus on our new lives in our new home nation. That must be your goal. You cannot predict how long it will take for you. You have to live it. But if it is the goal that guides your new life, you will get there.

"True stability results when presumed order and presumed disorder are balanced. A truly stable system expects the unexpected, is prepared to be disrupted, waits to be transformed." -- Tom Robbins, American author - 1968-present

Readers of past Reports from Panama know that I also use a simple statistic to measure economic progress. It is called the Index of Monthly Economic Activity (IMAE in the Spanish version). This figure is faster to put together, so it is more up-to-date than GDP. Although it is not a complete picture of the economy, it includes all the major sectors and it follows the same path as GDP, so we can now take a look at that. This takes us from January of 2010 through September of 2015. The pink line shows the bouncing back and forth on a monthly basis that is common for this statistic. The blue line combines the monthly results and shows the trend over time.

 

You will notice that there is a slight dip in the trend line in late 2014 and early 2015. Growth was not negative. It simply slowed down and it did that for a reason. The current government, elected last year, was disturbed to find that government expenses over income were running at 4.6% of GDP. I will not bother explaining that, except to note that this is not unusual in the world, but it is very unusual for Panama. In a rapidly growing nation with a rapidly growing economy, a deficit is common and acceptable if it is being used for productive reasons (as is true here) because income is growing even more rapidly. But there is a limit beyond which you can have serious problems.
 
This administration did not cancel the major infrastructure projects that the nation needs, but they renegotiated some contracts where possible and generally slowed down large-scale projects. As a result, the percentage dropped to 1.8% and that is an excellent result from the viewpoint of financial responsibility. Panamanians have proven to be very conservative on this topic. As a result, our "investment grade" status is solid and we continue to be able to borrow money at far better interest rates than our neighbors who are not as conservative with their money. Now the projects that were delayed are moving forward, but in a financially responsible manner. Some people were upset to see things slow down, but I never complain when nations take action to live within their means. I wish they all did.
 
So how do we compare with other Latin American nations? For this graph, I chose to include the two largest Latin American economies, Brazil and Mexico. In terms of purchasing power, Brazil is the 7th largest in the world and Mexico is the 11th largest. I included Peru which has done well in the last couple decades in pulling itself out of poverty, and Colombia, our neighbor of which Panama was part before it separated and set up its own republic. In addition, I included Costa Rica and Ecuador, two nations often of interest to RW members.
 
The economic growth of each nation is divided by its population so we get a "per capita" (per person) comparison and the statistics are corrected for inflation and for purchasing power which takes into account that a dollar can buy more (or maybe less) in some nations than others. It makes it possible to compare nations that are very different. So Let us take a look at the results.

 

 

I think the graph speaks for itself. But Bob, how does Panama do so much better than the big economies that everyone talks about? The answer is simple. Panama has a smaller population than any of these nations. You see, it is not simply a question of "How much money do you make". It is a double question, "How much money do you make and how many mouths do you have to feed?" That is a much more practical way to look at it and the results are obvious.
 
Expats often ask me, what difference does Panama's growth make for me? It is very simple. Life in Panama whose economy is rising steadily as it has for the last 25 years, especially the last 10, is a lot more comfortable for expats than living in a nation whose economy is stagnant or failing. Panama is a democracy and Panamanians are not shy to express their opinions, but one thing has especially impressed me.
 
I have lived here for two complete administrations and now am living with a third. The Presidents come from different parties (no party has won two elections in a row since 1989), have different styles, and different viewpoints on various topics, but they all have had one thing in common that continues today - dedication to expanding the Panamanian economy and taking it to new heights. As I have said many times, Panama is a growing tourist attraction, but Panama is not a "tourist country". It is a "business country" and has been since the Republic was proclaimed a little over a century ago. This focus on economic growth, especially over the last couple decades, has benefited everyone. It is hard to argue with success.
 
In past reports, I have had a couple pages or more on various news details on Panama's development, but that added a great deal to the text, so I am going to go a little more gently now. There is always so much, it is easy to get carried away! Here are a few of the main points and then we will move along.
 
Starting in February, Turkish Airlines will have three direct flights from Istanbul to Panama City. Initially, they were going to stop in Bogota, Colombia on the way, but all flights are now direct. Also in February, El Al Airlines is scheduled to provide direct air service from Tel Aviv and Emirates Airlines will provide direct service from Dubai (the longest flight in the world at that point, 17 hours and 35 minutes). Each of these airports serves as a "hub" for people of many nations, especially businesspeople who will now be able to fly directly to Panama without passing through Europe or the US. Air Europa is now operating charter flights from Madrid, Spain. Lufthansa has begun its direct flights from Frankfurt, Germany. Alitalia is considering direct flights from Rome which makes sense given the thousands of Italians coming our way these days. The one thing we lack is a direct flight to Asia, but given that Panama and Singapore have signed an air services agreement, that will change, although they will likely wait for the opening of the second terminal at Tocumen International and reduced congestion.
 
The latest gasoline price data in this region through 7 December show the following by nation. The price is per gallon, so divide by 4 to get a rough estimate of per-litre cost. The first figure is for diesel fuel, second is regular gasoline (91 in Panama), and third is high-octane gasoline (95 in Panama). These statistics are put together by the government of El Salvador for Central America. Panama is added for comparison.
 
Guatemala - $ 2.17 - $ 2.44 - $ 2.63
El Salvador - $ 2.26 - $ 2.49 - $ 2.66
Nicaragua - $ 2.73 - $ 3.17 - $ 3.34
Honduras - $ 2.82 - $ 3.17 - $ 3.46
Costa Rica - $ 3.15 - $ 3.77 - $ 3.93
Panama - $ 2.10 - $ 2.34 - $ 2.50
 
Now that the budget process is back on track, the large infrastructure projects are underway. The second Metro line is under construction. The first has been very successful. The planning of the third line continues. The Canal expansion is well over 95% complete and still scheduled for opening this April. Between unions and contractors, something could slow it down again, but it is definitely on its way. A fourth bridge over the Canal is on its way too. Work continues on the second terminal at the international airport and it should be available in early 2017. Planning for a third terminal has begun. Air traffic sets new records every year and is expected to continue for some years to come. Panama already has a better transportation infrastructure than most Latin American nations and it continues to grow and improve. The new Panama City metro area sewage system is proceeding and expanding. There is more from road construction throughout the nation to a new convention center in Panama City, but you get the point.
 
This year's GDP growth rate will be around 6%, a leader in the western hemisphere, and next year's is expected to be around the same or a little more, again leading the hemisphere, US and Canada included.
 
Foreign Direct Investment (FDI) keeps setting records and was up nearly 18% in the first half of the year from the year before. Final figures for 2015 will be impressive. This continues to be a clear sign of Panama's stability in the eyes of major investors. The 2007 incentives that convinced so many global businesses to relocate their regional offices and operations to Panama (well over 100) are planned for modification to encourage manufacturing as well. That will be another boost to FDI.
 
And if anyone is concerned with how the Canal is doing, it finished its fiscal year at end-September with a 4.3% increase in total tonnage moved from last year and set a new record. The Canal is doing just fine.

I know some of you have read that Latin America is going through tough times economically. A few members write me and ask if Panama faces the same problems. The answer is simple. No. The most important economic problem for other Latin American nations is their dependency on the sale of natural resources like oil, natural gas, tin, copper, gold and so forth. Their budgets depend on high prices.
 
That was not a problem for many years, but things have changed. I am sure most of you are aware of the dramatic fall in the price of oil. That is only a small part of the total picture. Standard & Poor's provides the internationally-used indices (indexes) of commodities. The chart below shows what has happened in 2015 through 30 November and how this year ranks among the "worst years" for each commodity. Some, like oil as I write today, have fallen even further since this summary was produced.

 

 

Mexico, Brazil, Bolivia, Ecuador, Peru, Venezuela, Argentina, Chile and others need high commodity prices to fund their budgets. Panama does not depend on any of those items above for its revenue. We sell a tiny amount of coffee, cocoa, and other agricultural products, but so tiny that it has no significance to our economy or to world markets. In simple terms, we do not sell these commodities, we buy them.
 
We do not enjoy the suffering of others, even when we benefit from it. After all, in recent years when commodity prices were much higher, we still had the best economic growth rate in the region and still do. But we do not complain when prices are low. It means more money in everyone's pocket here.

 

Following full return of the Panama Canal to Panamanian sovereignty in 2000 and after the first northern "bubble", the stock market crash, Panama's development took a dramatic turn and has never looked back. You might say modern Panamanian history begins with the 21st century. Since then, expats from many nations have arrived. I think of them as centered on three "waves", each having a noteworthy financial impact.
 
The First Wave was made up of Americans and Canadians in the early part of the century. Through roughly 2007, they were responsible for a boom market in real estate. They still come in rising numbers, but with less money on average due to the financial crisis up north or are simply more conservative in their purchasing. This would have been a major hit on Panama's upper-end real estate market if it were not for the Second Wave.
 
The Second Wave was led by Venezuelans who have been coming for years to escape the economic disaster in their homeland and their numbers have increased steadily. They frequently sold everything they could back home and moved an entire family here, often bringing considerably more money than the average North American. But it was not just them. The incentives that led so many global businesses to move regional offices and operations here brought many management staff with them from all over Latin America, so the Second Wave is Latin American, not just Venezuelan. They continue to grow in number and that Wave is not finished yet, but a Third Wave is showing up that could have a dramatic effect in coming years.
 
The Third Wave is arriving from Europe. I and my firm here have been following this for some time now as it is what we had forecast a decade ago. We have done a lot of statistical analysis and I will share one small example here - the number of Italian citizens arriving to visit Panama. The table shows the average number arriving each month since 2009. I show monthly figures for the sake of comparison since the full 2015 total is not yet available. But if I did, you would see that the number of Italians arriving in 2015 through September already is more than all twelve months of 2014.

 

 

As you can see, the rate of increase is itself increasing. Here is a little something extra I will share with you. Although eleven times as many Americans visited Panama during this nine-month period in 2015, many more Italians received permanent residency visas than Americans during the same period. They are not coming just for the warm weather. In any event, perhaps instead of "Bienvenido!", I should be saying "Benvenuto!"
 
It is not just Italy. France is very impressive too, among others. I suspect new records are likely for 2016 as well. In any case, I welcome the Third Wave and hope they will make a useful contribution to Panama and its people!

"Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him."-- Dwight D. Eisenhower, American President, (1890 – 1969)

 

The 20th century is over and never coming back. It is history. I celebrated my 55th birthday in 2000 and my 70th earlier this year. I have spent the great majority of my life in the 20th century and sometimes it can still "seem like yesterday". Today, the average Panamanian is 28 years old. He or she has already spent the majority of his or her life in the 21st century. It is probably safe to guess that 90% of their real memories are from the 21st century. Three and a half years from now in 2019, Panama will hold its next national elections and among the voters will be some who were born in the 21st century. The same will be true in many nations. This is their century.
 
It is our century too, we share it with them. We all need to make this our best century. Any goal less than that is a mistake. Do not lie down on the tracks of history, waiting for the train of the future to run over you. Be on the train where you belong!
 
If you are someone who has read my past Reports from Panama, you know exactly what comes next. The final words are always the same from the very first report I wrote many years ago. So let us all read this together, once again.
 
No one knows the future. Free markets go up and free markets go down. The future is not a simple extrapolation of the present. Anything can happen. Everyone has an opinion and those words above are just opinions.