Millionaire magnate ahead in Panama election

PANAMA CITY (Reuters) - Multimillionaire supermarket chain owner Ricardo Martinelli took a strong early lead in Panama's presidential election on Sunday, looking to buck a trend of left-wing leadership wins in Latin America.

First partial results gave conservative Martinelli an advantage of more than 20 percentage points over Balbina Herrera of the ruling centre-left Revolutionary Democratic Party, or PRD, whose government has struggled to rein in crime and high prices.

Martinelli was ahead with 60 percent of the vote, against 37 percent for Herrera, after ballots were counted from 15 percent of polling stations.

Panama's dollarised economy has led Latin America with growth of near or above 10 percent in recent years, fuelled by U.S.-Asia trade through its transoceanic canal and robust banking activity.

But 2009 growth could slow to 3 percent or less as the global crisis hits credit and shipping.

"Before, with $20 (13 pounds) you could buy a lot, now the prices are double," Edith, a 47-year-old maid, said after casting her vote for Martinelli's Democratic Change party in the run-down neighbourhood of Calidonia. "As a businessman he might be able to figure out how to improve prices."

While the government launched an ambitious $5.25 billion (3.5 billion pound) expansion of the canal and is liked by foreign investors, Martinelli is seen as more pro-business than his rival.

Herrera has an anti-U.S. past and old ties to a former military strongman that rankle some voters.

Both candidates have promised to take a tough line against crime -- a popular message in Panama, which is a transit point for South American cocaine trafficked to the United States.

GROWTH SEEN FALLING THIS YEAR

In a parallel parliamentary vote also held on Sunday, analysts said the PRD's well-established political base might give it a majority in the 71-seat Congress, creating an opposition that could complicate Martinelli's rule if he wins.

Demand for luxury apartments in the skyscrapers that dominate Panama City's skyline is dropping. Builders say some projects are on hold and half-built condos are up for sale.

Neither of the two main candidates is expected to run up a big budget deficit, which could worry foreign investors drawn for years to the country's booming service and property sectors.

Martinelli, 57, a U.S.-educated and self-made businessman who owns the dominant Super 99 supermarket chain, wants to build ports, highways and a Panama City subway if he wins.

He also would impose a flat tax of between 10 percent and 20 percent to appeal to foreign investors keen for a clearer tax code, but the measure would raise taxes on Panama's thriving banking and insurance sectors.

Both candidates back a free trade accord with the United States, which has been held up in the U.S. Congress by concerns about Panamanian labour rights and tax evasion.

Herrera, 54, clashed with Washington when she led protests against former President George H.W. Bush when he visited after a 1989 U.S. invasion to oust Gen. Manuel Noriega, a dictator who was jailed in the United States on drugs charges.

A former housing minister, Herrera has tried to play down her old links to Noriega, who has said he hid in her home during the invasion. Her supporters say that is history.

(Additional reporting by Elida Moreno; Editing by Doina Chiacu)