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Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Panama's economy is small, very much open, highly diversified, dollar driven and highly competitive by regional standards. In 2022, the country had an estimated growth in GDP of 7.5%, mainly driven by a significant upturn in tourism, and an increase of investment in infrastructure and transportation, which stimulated employment and boosted private consumption. The Panamanian economy is expected to continue recovering in the coming years, albeit at a slower pace, with the IMF predicting a GDP growth of 4% for 2023 and 4.5% for 2024.

In 2022, gross public debt slightly decreased to 55.6% of GDP and, with the country experiencing ongoing fiscal improvement and economic recovery, a gradual debt decrease is expected in the coming years. According to the IMF, the gross government debt is expected to decrease to 55.1% in 2023 and 53.9% in 2024. Fiscal deficit reached 3.7% of GDP in 2022, and should continue decreasing in 2023 and 2024, reaching 2.8% and 1.9%, respectively. Although the current account has a structural deficit, it had been declining. In 2022, it represented -3.7% of GDP, a rate that's expected to decrease to -3.3% in 2023 and -3% in 2024. The external debt is sustainable, with more than 50% held by the banking system. A sovereign wealth fund and banks' foreign currency assets mitigate liquidity risks. In 2022, inflation increased to 3.9%, but this rate is expected to drop to 3.3% in 2023 and 2.5% in 2024. The country is known as a tax haven, and has recently improved the banking regulation system, especially transparency and cooperation with the legal authorities. However, the Panama Papers scandal has shown that banking regulation remains insufficient. In addition, the banking sector is highly exposed to the regional slowdown and strength of the USD, which can affect internal consumption and investment. Two economic drivers, namely real estate and construction, could be particularly affected: given the weight of foreign demand in these sectors, there is concern about potential losses for developers in the event of demand falling as we observe an excess of supply in real estate and high-end tourism. Although the pandemic has significantly impacted the Panamanian economy, the fiscal measures implemented by the government have been effective in boosting economic activity, which has been gradually recovering.

According to the World Bank, Panama has the 17th highest GDP per capita in Latin America & Caribbean, at around USD 14,617. However, despite remarkable progress made by the authorities in recent years, income inequality is among the highest in the region and poverty has increased as a result of the COVID-19 pandemic, especially within most vulnerable groups. When it comes to children, poverty is much higher than average, as more than half the country's children are poor, and almost a fifth suffer malnutrition. Although unemployment has been rising since 2012, the country experienced a significant decrease of unemployment rates in 2022, due to the Panama's steady recovery following the initial impact of the COVID-19 pandemic. Still, it's worth noting that the informal sector employs more than 40% of the labour force. In 2022, unemployment reached 9.5% of the population, and it should continue stable in the coming years, with rates expected to reach 10% in 2023 and 2024.

Main Indicators 202020212022 (E)2023 (E)2024 (E)
GDP (billions USD) 53.9863.6171.9777.2682.15
GDP (Constant Prices, Annual % Change) -17.915.310.05.04.0
GDP per Capita (USD) 12,61614,66416,37317,35018,216
General Government Balance (in % of GDP) -5.2-4.9-3.7-3.0-2.0
General Government Gross Debt (in % of GDP) 65.658.454.954.353.6
Inflation Rate (%) -
Unemployment Rate (% of the Labour Force) 18.511.
Current Account (billions USD) -0.19-2.05-2.97-3.33-3.26
Current Account (in % of GDP) -0.4-3.2-4.1-4.3-4.0

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

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Main Sectors of Industry

The economy of Panama is largely dependent on the mining, agriculture, and timber industries. The country has one of the largest copper ore reserves in the world, as well as large reserves of gold, manganese, and iron. Hydropower is also a major natural resource in Panama as it supplies 60% of all electricity in the country. Additionally, 30% of the country's land is devoted to farming, as agriculture is one of the industries that contributes the most to the economy. Overall, agriculture accounts for 2.6% of GDP and employs 14.4% of the labour force - about 80% of all farmers in the country are family farmers. Panama produces mainly bananas and different varieties of vegetables, maize, sugarcane, rice, coffee, watermelons, cocoa beans, pineapples, potatoes, coconuts, soybeans, timber, milk, livestock and shrimp. In 2022, Panama saw good harvests, mainly due to above‑average precipitation (especially in the country's key-producing western region), good management, technological improvement, and the increase in hectares.

The industrial sector is not very developed and contributes 27.7% of GDP, employing 17.7% of the labour force. 43.6% of Panama land is forest land, so logging is a big industry in the country. The main industrial activities are in agribusinesses, dairy, sugar refining, apparel manufacturing, petroleum products, chemicals, paper and paper products, printing, furniture and building. Given the country's large mineral reserves, mining is the fastest growing industry in Panama. In 2022, the industry sectors that registered the highest growth rates were construction, brewing, and sugar milling

Panama's economy is pegged to the dollar and the service industry is the biggest in the country, accounting for 66% of Panama’s GDP and employing 67.9% of the workforce. Transport is the most important sector of the service industry, as it comprises the Panama Canal - the government’s chief revenue source. Other well-developed sectors are logistics, banking, the Colón Free Zone (a focal point for foreign investment in the manufacturing industry), insurance, container ports, boat registrations and tourism. Panama is also an important country for off-shore banking services. In 2022, the services sector showed a steady recovery following the pandemic, mainly led by the activity in the Panama Canal and a significant boost in tourism.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 14.4 17.7 67.9
Value Added (in % of GDP) 2.6 27.7 66.0
Value Added (Annual % Change) 2.9 37.5 9.4

Source: World Bank - Latest available data.

Monetary Indicators 20162017201820192020
Panamean Balboa (PAB) - Average Annual Exchange Rate For 1 USD

Source: World Bank - Latest available data.



Foreign Trade

Panama is mainly export-oriented and highly dependent on trade, which represents 92.7% of GDP. The country also has the largest trading fleet in the world, with 16% of the global fleet carrying capacity being registered in Panama. The free zone of Colón is the second largest free zone in the world after Hong Kong, demonstrating the country’s openness to foreign trade. Panama mainly exports copper ores (77.5%), bananas (4.6%), ferrous waste and scraps (1.4%), fish (1.3%), and palm oil and its fractions (1.3%), while its top imports include petroleum oils (14.5%), motor vehicles (5.3%), medicaments (4.9%), telephone sets (1.8%), and maize (1.5%). According to IMF Foreign Trade Forecasts, the volume of exports of goods and services increased by 20.6% in 2021, while the volume of imports of goods and services increased by 25.2%.

The country’s partners are China, the United States, Japan, South Korea, Spain, India, Mexico, Costa Rica, and Colombia. The expansion of the canal has more than doubled its capacity, allowing it to accommodate vessels that were originally too wide with the United States and China being the first users of this vessel type. The country has trade agreements with the United States, Mexico, Peru, Canada, Chile, Singapore, Taiwan, and Israel. Panama is also a member of the "Central American Integration System" (or SICA), a regional institution whose main purpose is to promote integration between Central American countries, fostering security, freedom, democracy, and social development within the region. Additionally, Panama is also one of the countries in the Central America-EFTA agreement, as well as the Central America-EU agreement.

According to the last available data from WTO, Panama imported USD 20.5 million worth of goods and USD 4.2 million in services in 2021. Over the same period, the country exported USD 13.1 million in goods and USD 10.7 million in services. As a result, when only accounting for goods, Panama had a trade deficit of USD 3.8 million. However, the country registered a positive overall trade balance (including services) of USD 2.6 million in 2021.

Foreign Trade Values 20172018201920202021
Imports of Goods (million USD) 21,93923,00621,49214,74020,596
Exports of Goods (million USD) 11,09311,48011,3189,48313,161
Imports of Services (million USD) 4,6524,8285,0013,0094,263
Exports of Services (million USD) 13,30313,67813,8178,50210,745

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20172018201920202021
Foreign Trade (in % of GDP) 87.490.
Trade Balance (million USD) -8,469-9,209-7,607-2,819-3,871
Trade Balance (Including Service) (million USD) 192-3551,0232,6772,610
Imports of Goods and Services (Annual % Change) 4.34.5-2.5-34.025.2
Exports of Goods and Services (Annual % Change)
Imports of Goods and Services (in % of GDP) 45.647.243.834.541.6
Exports of Goods and Services (in % of GDP) 41.842.841.239.651.1

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20222023 (e)2024 (e)2025 (e)2026 (e)
Volume of exports of goods and services (Annual % change)
Volume of imports of goods and services (Annual % change)

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

International Economic Cooperation
Panama joined the WTO in 1997. It made a free-exchange agreement with Taiwan (2004), Salvador (2003) and Canada (2009) on the elimination of tariffs in sectors of industry, agriculture, forestry and fishing. The country is currently negotiating with the United States. Panama has also shown interest in negotiating with MERCOSUR and has been invited to join the G3 (which unites Venezuela, Colombia and Mexico). Finally, Panama signed a Free Trade Agreement with Canada.

Main Partner Countries

Main Customers
(% of Exports)
China 32.7%
Japan 15.0%
South Korea 7.4%
India 6.5%
Germany 6.4%
See More Countries 32.0%
Main Suppliers
(% of Imports)
United States 24.2%
China 10.8%
Mexico 4.3%
Colombia 3.0%
Brazil 2.2%
See More Countries 55.5%

Source: Comtrade, Latest Available Data



Political Outline

Current Political Leaders
President: Laurentino "Nito" Cortizio Cohen (since 1 July 2019)
Vice President: José Gabriel Carrizo Jaén (since 1 July 2019)
Next Election Dates
Presidential: May 2024
National Assembly: May 2024
Main Political Parties
Panama's political system is based on a multi-party system where parties work together to form coalition governments. The country's major political parties are:

- Democratic Revolutionary Party (PRD): centre-left, populist, social-democratic
- Democratic Change (CD): centre-right, opposition, works toward continued economic growth and better infrastructure
- Nationalist Republican Liberal Movement (MOLIRENA): centre-right, pro-business, liberal, conservative. Allied with the CD
- Panamenista Party (PP): right-wing, populist, conservative
- People's Party (PP): centre-right, christian democracy, conservative. Formerly known as Christian Democratic Party or PDC
- Independent Social Alternative Party (PAIS): right-wing, conservative, evangelical
Executive Power
The president is both the chief of state and head of the government. The president and the vice-president are elected by popular vote to serve a five-year term, and are not eligible for a consecutive re-election. The president appoints the Cabinet and has executive powers, which include the implementation of the law within the country and running the day-to-day affairs.
Legislative Power
The legislature in Panama is unicameral. The parliament, called the National Assembly, has 71 seats and its members are elected by popular vote for five-year terms. The legislature is a branch of the power which is equal to and independent of the executive. Legislative power is vested in both the government and the National Assembly.


COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Panama, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.