Panama

Capital: Panama City

Local time:
It is %T:%M %A in Panama

GDP growth rate: 6.6% in 2013

FDI stock: 20 945 million USD in 2010

Economic trends

Before the international financial crisis, the Panamanian economy had the highest growth rate in Latin America (this was due to the enlargement of the canal, as well as the development of the Colon Free-Trade Zone, the banking and real estate sectors). The country resisted well the international financial crisis, the sensible slowdown of the activity interrupted the trend that was overheating its economy. After having displayed a growth rate of 3% in 2009, the Panamanian economy has rebounded reaching a growth of 6.2% in 2010, stimulated by the revival of international trade and the increase in public investments. 

In a parallel direction as the large infrastructure and development projects (skyscraper, highway, enlargement of the canal and the construction of a third set of canal locks, construction of a new port in the Pacific and the restoration of Panama's bay), the president Martinelli has launched a five-year strategic plan 2010-2014 aiming at increasing the state's resources and reducing the public debt. The tax regime, in a medium term, anticipates a tax law reform and the reinforcement of the fiscal administration. The president also wishes to clean Panama's reputation as a "fiscal paradise" and the country has already made progress in that ground: Panama has obtained the degree of a country for investment from different rating agencies; and the OECD has re-classified the country in the "gray list" instead of the "black list" of the non-cooperative fiscal paradise (tax-haven) countries. 

Despite the remarkable progress that Panama has made, poverty still affects 30% of the population and the inequalities are among the highest in Latin America. The unemployment rate, estimated at 5.5% in 2010, is low, but informal employment still involves more than 40% of the active population.

Main branches of industry

Agriculture represents about 6% to GDP and employs 15% of the active population. The main productions of Panama are bananas and all other fruits, vegetables, corn, sugar, rice, coffee, construction wood, livestock and shrimp. Panama has limited natural resources: construction wood, copper and gold.

The industrial sector is moderate and contributes only 17% to the GDP. The main industrial activities are based on industrial food preparation, dairy products, sugar refinery, clothes manufacturing, petroleum products, chemical products, paper and its by-products, printing, furniture manufacturing and construction.

The tertiary sector, which contributes to more than three fourths of the GDP and employs two thirds of the active population, is the real driver of the country's economy. It involves: finances, insurance, health and medical, transports, telecommunications, maritime services, tourism, the trade-free zone of the two points, public administration and trade. The Free-Zone of Colon, established in 1953, is a center of foreign investments in the manufacturing industry.

International trade

Panama is a country mainly directed towards export.  The Colon Free-Trade Zone, which is the 2nd largest free-trade zone in the world after Hong Kong, displays the country's openness to foreign trade.  The foreign trade's share represents more than 25% of the GDP.  Panama mainly exports fishing and sea products, bananas, petroleum products, sugar and coffee. Panama's main clients are the United States, the Netherlands, Spain and Costa Rica. Panama essentially imports electrical equipment & electronics, crude oil, foodstuffs, chemicals, vehicles and pharmaceutical products. Panama's main suppliers are the United States, Costa Rica, Mexico and China.  The trade balance of the country is structurally in deficit, a trend that has increased in these recent last years.