Is rising inflation killing beach businesses?

Reuters reports that Panama’s 12-month inflation rate is up by 6%. This is often echoed in the comments of visitors who consistently say that prices have gone up since the last time they were here.  Higher prices mean that visitors to Panama and expat residents on a budget are spending less.   This dynamic is apparent in the beach areas as merchants struggle to find a price point that will keep them in business.  Recently two area restaurants closed their doors. Dolce Idea, a gelato franchise serving Italian ice cream closed down, shortly after its opening two months earlier. Sunset Grill, which managed to stand its ground for over a year, seems to have suffered a similar fate. Yet others who have not been able to stand the economic downturn is a Mexican restaurant on the highway and a small furniture store, specializing in rattan pieces. Last year, other high end specialty stores such as Downtown Living and Nostalgia also opened and closed within short periods.   The question lingers whether high rents, in a lightly trafficked areas, like Coronado are to blame for killing small businesses. While the area builds it's consumer base, larger chain stores like Cochez and Matchetazo are expected to hold their ground and in fact draw people to the area. In the meantime,  the impression of the economic power of area consumers is more inflated than their actual spending ability. What doesn't compute is the high cost of real estate in an area that cannot sustain businesses. Add a rising inflation rate to the mix, and one worries if we are seeing the beginning of abandoned storefronts and homes that cannot be sold.

While the area may not yet be a fertile ground for instant business growth, the companies who can plant a seed now should be betting on future rewards. The secret lies in backing the right product and being able to withstand a few lean years.  The soon-to-open airport, new schools and the many new housing developments in the beach area indicate that the money at Panama's beaches is in real estate development, at least for now. One hopes that prices will remain attractive enough to build a thriving economy.

For individuals coming to Panama in the hopes of starting a business, I would say, do your research. Live in the area for a few months, get to know the community before sinking your fortune into a venture. Be prepared to spend more time establishing your business, than you expect. Use community forums such as Playacommunity.Com to get the word out about your company. Do regular events, specials, expert articles etc to stay on top of people's minds and encourage people to use you.