UPDATE 5-Supermarket tycoon wins Panama election
* Opposition magnate Martinelli declared election winner
* Fears over economy dominated voters' concerns
* Panama's strong economic growth fading (Herrera concedes defeat, updates results)
By Mica Rosenberg and Sean Mattson
PANAMA CITY, May 3 (Reuters) - Supermarket tycoon Ricardo Martinelli swept to victory in Panama's presidential election on Sunday, bucking a trend of left-wing leadership wins in Latin America.
The conservative opposition candidate's business experience swayed voters worried about their livelihoods in a global recession that has stunted Panama's recent stellar economic growth.
The electoral tribunal declared Martinelli the winner as results showed him taking an unassailable lead of 61 percent of the votes, against 37 percent for Balbina Herrera of the ruling center-left Revolutionary Democratic Party.
The government has struggled to rein in crime and high prices and Martinelli managed to win over many low-income voters.
"We can't continue to have a country where 40 percent of Panamanians are poor," he said in a victory speech.
While the government launched an ambitious $5.25 billion expansion of the canal and is liked by foreign investors, Martinelli is seen as more friendly toward business.
Panama, which uses the dollar as its currency, last year suffered its highest inflation levels since the early 1980s.
Inflation has since tamed as economic growth slows down but voters anger at higher prices has lingered.
"Every 15 days I go to the market and food prices are higher. You can't buy meat anymore," said Oreida Sanchez, 36, a teacher, after voting for Martinelli in the capital's run-down neighborhood of Calidonia.
Anti-American leftists like Venezuelan President Hugo Chavez have advanced in Latin America in recent years but Panama has long had close ties to the United States, which built the Panama Canal and ousted dictator Gen. Manuel Noriega in 1989.
Herrera was once close to Noriega, which rankled with some voters. She conceded defeat and promised to be a strong opposition.
Convicted of drug trafficking and money laundering by a U.S. court, Noriega is now in a Florida jail.
ECONOMY DAMPENED
Panama's economy has led Latin America with growth of around 10 percent in recent years, fueled 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.
Martinelli, 57, a U.S.-educated and self-made businessman who owns the dominant Super 99 supermarket chain, has promised "a massive public works program" to return Panama to growth.
He wants to build ports, highways and a Panama City subway.
Some worry that Martinelli might not be able to keep his business life separate from running the country.
"I have my doubts about the cost of living. Because he's in the groceries business, he won't be interested in bringing prices down," said Gabriel Tunon, 59, an accountant.
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.
In a parallel parliamentary vote on Sunday, Herrera's PRD has a well-established political base that might give it a majority in the 71-seat Congress, creating an opposition that could complicate Martinelli's rule.
The magnate 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.
Panama has agreed a free trade accord with the United States, which has been held up in the U.S. Congress by concerns about Panamanian labor rights and tax evasion.
Current President Martin Torrijos will hand over power to Martinelli in July. (Additional reporting by Elida Moreno; Editing by Doina Chiacu)
