Panama free zone Jan-March turnover falls 20.5 pct

Reuters, 04.14.03, 3:42 PM ET

PANAMA CITY, April 14 (Reuters) - Turnover at Panama's Colon Free Zone, Latin America's largest tax-free import and re-export center, fell 20.5 percent to $1.7 billion in the first three months of 2003, hurt by weak demand for goods, zone officials said on Monday.

With many Latin American economies yet to emerge from economic doldrums, sales in the January to March period tumbled 19.1 percent to $944 million, compared with the same period in 2002.

The free zone imports everything from tennis rackets to photocopiers from Asia and the United States, selling the goods on to consumers from Mexico City to Montevideo.

Imports at the zone, based at the mouth of the Panama Canal in Colon, 50 miles (80 km) northwest of Panama City, slipped 22.1 percent to $797 million, official data showed. Turnover is the sum of the zone's purchases, or imports, plus its sales.

"We don't see a strong recovery of sales until the economies of big buyers such as Venezuela start to pick up," said a trader at the 1,000-acre (400-hectare) park, home to some 2,000 companies including luxury goods-maker Yves Saint Laurent and toolmaker Black & Decker Corp (nyse: BDK - news - people).

Venezuela, which purchases some 20 percent of goods every year, is the free zone's largest buyer.

The Venezuelan economy will shrink by about 8.9 percent this year, in line with last year's contraction, Venezuelan Finance Minister Tobias Nobrega said in a Reuters interview on Monday. The free zone saw one of the worst years in its 55-year history in 2002, after turnover fell 10.7 percent to $9.07 billion in 2002, compared with 2001.

Latin American economies are expected to grow 1.5 percent in 2003, rising to 4.2 percent in 2004, according to the International Monetary Fund.

China, Japan, South Korea and the United States are the principal users of the free trade park, exporting goods through Panama on a tax-free basis.