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Panama: Economic and Political Outline
Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
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 Indicators | 2009 | 2010 | 2011 | 2012 (e) | 2013 (e) |
| GDP (billions USD) | 24.06 | 26.81 | 30.23 | 33.31 | 36.28 |
| GDP (Constant Prices, Annual % Change) | 3.2e | 7.5e | 7.4e | 7.2 | 6.6 |
| GDP per Capita (USD) | 6,944 | 7,601e | 8,421 | 9,114 | 9,750 |
| General Government Gross Debt (in % of GDP) | 41.2e | 38.7 | 36.2 | 34.8 | 33.4 |
| Inflation Rate (%) | 2.4 | 3.5e | 5.7e | 3.5 | 3.0 |
| Unemployment Rate (% of the Labor Force) | 5.0 | 4.5 | 4.2 | 4.2 | 4.2 |
| Current Account (billions USD) | -0.05 | -2.99 | -3.74e | -3.98 | -4.07 |
| Current Account (in % of GDP) | -0.2 | -11.2e | -12.4 | -11.2 | - |
Source: IMF - World Economic Outlook Database ; World Bank , Last Available Data
Note: (e) Estimated Data
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.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 13.9 | 19.6 | 66.4 |
| Value Added (in % of GDP) | 5.3 | 16.7 | 78.0 |
| Value Added (Annual % Change) | -2.6 | 5.0 | 6.0 |
Source: World Bank - Last Available Data.
| Monetary Indicators | 2006 | 2007 | 2008 | 2009 | 2010 |
| Panamean Balboa (PAB) - Average Annual Exchange Rate For 1 USD | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
Source: World Bank - Last Available Data.
Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation
See the Country Risk Analysis Provided By Ducroire.
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.
| Foreign Trade Indicators | 2006 | 2007 | 2008 | 2009 | 2010 |
| Imports of Goods (million USD) | 4,831 | 6,872 | 9,050 | 7,801 | 9,140 |
| Exports of Goods (million USD) | 1,093 | 1,164 | 1,247 | 948 | 830 |
| Imports of Services (million USD) | 1,673 | 2,065 | 2,561 | 2,118 | 2,657 |
| Exports of Services (million USD) | 3,957 | 4,887 | 5,718 | 5,463 | 5,906 |
| Imports of Goods and Services (Annual % Change) | 7.4 | 18.1 | 10.3 | -5.6 | 21.2 |
| Exports of Goods and Services (Annual % Change) | 11.1 | 22.0 | 10.3 | -0.9 | 6.2 |
| Imports of Goods and Services (in % of GDP) | 69.5 | 73.9 | 75.9 | 62.7 | 68.9 |
| Exports of Goods and Services (in % of GDP) | 76.7 | 81.2 | 81.8 | 79.1 | 65.0 |
| Trade Balance (million USD) | -1,715 | -3,190 | -4,546 | -2,123 | -4,615 |
| Trade Balance (Including Service) (million USD) | 557 | -354 | -1,391 | 1,206 | -1,283 |
| Foreign Trade (in % of GDP) | 146.2 | 155.1 | 157.7 | 141.8 | 133.9 |
Source: WTO - World Trade Organization ; World Bank , Last Available Data
| Main Customers (% of Exports) |
2010 |
| United States | 19.8% |
| Venezuela | 16.1% |
| Colombia | 15.6% |
| Costa Rica | 5.1% |
| Dominican Republic | 5.0% |
| See More Countries | 38.3% |
| Main Suppliers (% of Imports) |
2010 |
| China | 24.9% |
| United States | 20.5% |
| Singapore | 10.4% |
| Hong Kong | 4.5% |
| Mexico | 4.3% |
| See More Countries | 35.5% |
Source: Comtrade, Last Available Data
Source: Comtrade, Last Available Data
Source: Worldwide Press Freedom Index 2010, Reporters Without Borders
Map of freedom 2010
Source: Freedom House
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Last Updates: January 2012