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Home Countries Costa Rica

Panama Versus Costa Rica

Kathleen Peddicord by Kathleen Peddicord
Mar 25, 2009
in Costa Rica, Panama
0
There are many options going on about What To Do In Panama City.
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“You have to see this place,” remarked our weekend traveling companion, almost in awe.

“I admit it. I was skeptical,” continued our new friend, an American four years resident in Costa Rica.

“You told me the infrastructure is better in Panama than in Costa Rica, but, really, I didn’t believe you. Panama’s still Central America, after all.

“You told me the countryside and the coast are both dramatically beautiful. But, again, I didn’t pay much attention. Everyone in Costa Rica talks about how flat Panama is…how much more impressive Costa Rica’s Pacific coast is than its counterpart in Panama.

“You told me the economy in Panama continues to surge ahead, despite everything going on elsewhere in the world. You told me about the construction and the road works, about the tourism figures and the Canal revenues. Frankly, I dismissed it all as so much rhetoric. I mean, times are tough all over, right? At least that’s what I believed.

“Really, I made the trip out of curiosity.”

“And now that you’ve spent a couple of days here?” I asked.

“I’m sold. Everything you’ve been saying is true.”

Our friend who traveled with us from Panama City to the Pacific coast of Veraguas Province and back last weekend is thinking about moving on from Costa Rica. He came to see what Panama has to offer.

The business he launched in Costa Rica a year-and-a-half ago has stalled…as has the Costa Rican business world, real estate industry, and economy in general.

“There’s still opportunity in Costa Rica, I guess,” he told us, “but nothing like what I see here in some parts of this country.

“I see what you mean,” he continued, “about Panama’s middle class. It’s evident everywhere. All those housing developments we passed on the outskirts not only of Panama City, but of Santiago, as well, in Veraguas, for example. They all seem to be new housing for local middle-class families. And an expanding middle class, like the one here in Panama, is an important indictor of a country’s overall economic position.

“And the roads we traveled! Nowhere in all Costa Rica are there roads to compare with the ones we drove way out in what really is the middle of nowhere.

“I had the sense, before coming here, that Panama was expensive…maybe more expensive than Costa Rica. But that’s not the case. For some things, Panama is cheaper, especially out in Santiago and Veraguas. That restaurant you pointed out to me, where you could have a lunch plate of meat, salad, rice, and beans for US$2.50? That same tipico lunch in Costa Rica would cost about twice as much.

“There’s something else, too…something less quantifiable. In Costa Rica, there’s an attitude among the Ticos…I don’t know…almost as though they don’t want you there.

“Here in Panama, I don’t get any sense of that. I feel very welcome here.”

Kathleen Peddicord

TODAY:

“Kathleen, here’s a tip I discovered last week traveling in Panama City,” writes a friend from Canada.

“If you’re staying at an inexpensive hotel or condo in Panama City but want to enjoy the luxury amenities of the Miramar Intercontinental Hotel (US$329 per night), sign up for a week Spa Pass for US$63 per person.

“You get full-day access to the beautifully equipped fitness facility with sauna, steam bath, etc., and the nicest swimming pool in town, complete with lounge furniture, towels, and beverage and food service (although a little pricey).

“That works out to US$9 per day per person.

“The many daily rental condos in the area cost around US$100 a night…which is more than US$200 a night cheaper than staying at the Miramar. Meaning the US$18 a day for two is a screaming bargain.

“Oh, and you also get free parking. Here’s a recent photo of the pool to give you an idea of the facilities. The tall building in the background is our condo, due to be completed in August.”

View of Miramar Pool

 

MAILBAG:

“Kathleen, we are considering either Panama or Belize as a retirement location. Next month we are checking out Belize first to see how we like it.

“One thing I am concerned about, though, in the current economic uncertainty, is that both the Panamanian and the Belizean currencies are pegged to the U.S. dollar. If and when the dollar goes down, how will that affect the currencies in those two countries? Will their values go down, too?

“If that were to happen, how would you suggest to hedge that?

— Evelyn W., United States

Technically, both countries’ currencies are pegged to the U.S. dollar; however, Panama really has no currency of its own.

Either country could decide to devalue its currency against the U.S. dollar, which would make things cheaper (in dollar terms). Or they could allow their currencies to float, which, with a falling dollar, could make the Belize and Panama currencies more valuable.

However, neither country is really big enough to make those moves, so a declining dollar likely would mean a declining currency in Panama and Belize…which in turn would mean imports from non-dollar countries would become more expensive.

On the other hand, if your income (investment, earned, pension, etc.) is in U.S. dollars, moving to either Panama or Belize means you don’t have to worry about exchange losses when bringing money into these countries for living expenses.

To hedge against the dollar, you could buy euro, for example, but, unless you have a big investment portfolio and want to focus on this kind of investing, you probably aren’t going to get much value out of trying to hedge the long-term movements of the dollar. Actively trading currencies comes with risks that are probably more than the small or novice investor wants to take on.

One good way to hedge one currency, short of buying another, is to hold assets in another. That is, you could invest in a euro-asset–a piece of real estate in euro-land, for example. Invest in a euro-rental property, and you’d not only be diversified into a euro-holding, but you’d be generating euro-income, as well.

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Kathleen Peddicord

Kathleen Peddicord

Kathleen Peddicord has covered the live, retire, and do business overseas beat for more than 30 years and is considered the world's foremost authority on these subjects. She has traveled to more than 75 countries, invested in real estate in 21, established businesses in 7, renovated historic properties in 6, and educated her children in 4.

Kathleen has moved children, staff, enterprises, household goods, and pets across three continents, from the East Coast of the United States to Waterford, Ireland... then to Paris, France... next to Panama City, where she has based her Live and Invest Overseas business. Most recently, Kathleen and her husband Lief Simon are dividing their time between Panama and Paris.

Kathleen was a partner with Agora Publishing’s International Living group for 23 years. In that capacity, she opened her first office overseas, in Waterford, Ireland, where she managed a staff of up to 30 employees for more than 10 years. Kathleen also opened, staffed, and operated International Living publishing and real estate marketing offices in Panama City, Panama; Granada, Nicaragua; Roatan, Honduras; San Miguel de Allende, Mexico; Quito, Ecuador; and Paris, France.

Kathleen moved on from her role with Agora in 2007 and launched her Live and Invest Overseas group in 2008. In the years since, she has built Live and Invest Overseas into a successful, recognized, and respected multi-million-dollar business that employs a staff of 35 in Panama City and dozens of writers and other resources around the world.

Kathleen has been quoted by The New York Times, Money magazine, MSNBC, Yahoo Finance, the AARP, and beyond. She has appeared often on radio and television (including Bloomberg and CNBC) and speaks regularly on topics to do with living, retiring, investing, and doing business around the world.

In addition to her own daily e-letter, the Overseas Opportunity Letter, with a circulation of more than 300,000 readers, Kathleen writes regularly for U.S. News & World Report and Forbes.

Her newest book, "How to Retire Overseas: Everything You Need to Know to Live Well (for Less) Abroad," published by Penguin Random House, is the culmination of decades of personal experience living and investing around the world.

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