Panama Economy

Panama is one of Latin America’s leading business centres.  It has a sophisticated, dollar-based economy which is based primarily on a well-developed service sector that accounts for 75- 80% of the GDP. Services include the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, tourism, medical and health, and other business.  The country boasts a financial sector with 106 banks and the second largest free trade zone in the world.

At the end of 1999, with the withdrawal of U.S military forces, 70,000 acres of former U.S military land, along with more than 5,000 buildings were turned over to Panama.  Former President Mireya Moscoso faced the challenge of making them productive.  Global slowdown, however, along with a slump in the Colon Free Zone and agricultural exports held back economic growth in 2000-2003.   Export-oriented services and a construction boom fueled by tax incentives stimulated growth in 2004 and 2005.  Government implemented tax and social security reforms, as well as government-backed regional trade agreements and the development of tourism have also stimulated growth. The Government of Panama is also seriously considering undertaking a major $6-8 billion expansion of the Panama Canal, but a national referendum, required by Panama’s Constitution, has not yet been scheduled. About 30% of its population lives in poverty and unemployment remains high.

GDP growth rate indicates an upward trend:
1999 — 3.0%
2000 — 2.3%
2003 — 4.3%
2004 — 6.2%

Economy of Panama: Key statistics

GDP (purchasing power parity): $22.33 billion (2005 est.)

GDP (official exchange rate): $15.11 billion (2005 est.)

GDP - real growth rate: 4.9% (2005 est.)

GDP - per capita (PPP): $7,100 (2005 est.)

GDP - composition by sector: agriculture: 7.6% ,industry: 17.9%, services: 74.5% (2005 est.)

Labour force: 1.39 million
note: shortage of skilled labor, but an oversupply of unskilled labor (2005 est.)

Labour force - by occupation: agriculture: 20.8%, industry: 18% , services: 61.2% (1995 est.)

Unemployment rate: 8.7% (2005 est.)

Population below poverty line: 37% (1999 est.)

Inflation rate (consumer prices): 2.5% (2005 est.)

Agriculture - products: bananas, rice, corn, coffee, sugarcane, vegetables; livestock; shrimp

Industries: construction, brewing, cement and other construction materials, sugar milling

Exports: $7.481 billion f.o.b.; note - includes the Colon Free Zone (2005 est.)

Exports - commodities: bananas, shrimp, sugar, coffee, clothing

Exports - partners: US 50.5%, Sweden 6.6%, Spain 5.1%, Netherlands 4.4%, Costa Rica 4.2% (2004)

Imports: $8.734 billion f.o.b. (includes the Colon Free Zone) (2005 est.)

Imports-Commodities: Capital goods, foodstuffs, consumer goods, chemicals

Imports - partners: US 33.3%, Netherlands Antilles 8.1%, Japan 6%, Costa Rica 5.7%, Mexico 4.6%, Colombia 4.2% (2004)

Fiscal Year: The Calendar year

Source: The World Factbook http://www.cia.gov/cia/publications/factbook