A Canal in Nicaragua to Rival Panama’s?

Central America has often drawn investments from other countries due to its vast untapped resources and its significant location. France tried to build a canal there, America actually did and now it’s the turn of China to try.

China has been looking for alternative trans-oceanic routes and now there are talks of a 170-mile, $40 billion deal to build a canal across Central America being in the works. If this project comes to pass it will connect the Pacific (Brito) with the Caribbean (Bluefields) and will take five years to complete.

The aim is to rival the Panama Canal with one in Nicaragua. It’s a long way down the line, with a promised start date of December 2014, if indeed it ever even happens.  Nicaragua is an underdeveloped country considering infrastructure and this project throws up many engineering challenges. But it does show that Central America is becoming more important. South America, Asia and Africa’s share of world GDP (Gross Domestic Product) and trade has increased in the last 10 years making the region’s ‘bridge status’ more valuable.

James McKeigue of Moneyweek.com says, “The region has a lot to offer in itself. Countries there have good demographics with young and growing populations. They’re also all starting to open up their economies. The first major free-trade agreement (FTA) was with the U.S. in 2004. That’s been followed by one with the EU, which should come into force later this year. By signing up to these FTAs, Central America is gaining cheaper access to the lucrative European and American markets than its Asian rivals.”

There have been a lot of rumours about this project with no one standing over it officially as of yet. If this project does happen it could create many business opportunities and benefits within the country, but whether this development will take place or fall by the wayside is yet to be seen.

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