The service sector dominates Panama's
economy, which for a number of years has been one of the
fastest growing in the world. The income comes mainly
from the canal, the free trade zone in Colón, the ship
register and the international banking operations.
Tourism is also becoming increasingly important.
The channel has been in full control of Panama since
2000. It generates a significant portion of the
country's GDP through mainly passage fees, transit
services and sales of electricity and water. Every day,
some 40 ships pass through the canal. More than half of
the cargo comes from or is heading to the United States.
One-twentieth of the world's cargo traffic crosses the
canal, by weight. The channel's capacity has expanded
over the years, but more and more ocean-going vessels
gradually became too big for the locks. Therefore, a
third set of locks was built which was completed in 2016
and doubled the capacity. The expansion took nearly ten
years, cost at least $ 5.5 billion, and was the most
comprehensive since the channel was inaugurated.
Major imports by Panama, covering a full list of top products imported by the country and trade value for each product category.
New investments in the canal zone contributed to high
growth, as did other infrastructure projects. Growth
reached double-digit figures before and even after the
dip in connection with the global financial crisis in
2009. After that, growth has slowed down, but still
remained at between 5 and 5.5 percent between 2014 and
2017. A slight slowdown has followed.
Other major infrastructure investments are Central
America's first metro, in Panama City. The first line
was opened in 2014 and the expansion continues. Plans
are also under way for a fourth bridge over the Panama
Canal and an extensive renovation of the city of Colón.
Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including PAN which represents the country of Panama.
The free trade zone in Colón is the second largest in
the world, after Hong Kong. In the zone, there are about
2,500 almost completely tax-exempt companies, mainly
foreign, who further export goods to other parts of the
Large income differences
GDP per person is among the highest in Latin America.
The figure increased two and a half times in a decade
until 2016. But the income differences remain large. The
government has been criticized for relatively little of
the increased revenue going to education and basic
community services. The trade and services sector
creates quite a few jobs; many Panamans work in industry
and agriculture where productivity is lower and incomes
are low. There is concern that unemployment will
increase when the major infrastructure projects are
complete, only the expansion of the channel employed
around 30,000 people. However, no major increase in
unemployment was noted in the years following the
completion of the channel construction.
Panama has long wrestled with the image of the
country as a tax haven where not least money from drug
trafficking is "washed clean". Banking legislation has
been tightened, and in 2001 the economic cooperation
organization OECD removed Panama from its "black list"
of countries that were not considered to be cooperative
in the fight against money laundering. But the country
was still accused of enabling both tax evasion and money
laundering. In 2009, Panama was put on a new "gray list"
of countries that promised to ease their banking secrecy
to contribute to the international fight against tax
refugees, but who have not acted since. Since an
information exchange agreement has been concluded with
other countries, Panama was removed from that list in
2011. With Sweden, Panama has such an agreement since 1
But when the EU published its first black list in
2017, Panama was included. Shortly thereafter, Panama
was moved to a gray list of 55 countries that promised
to comply with EU standards in tax and financial
legislation, but without specific commitments. Two more
years later, in February 2020, Panama was moved back to
the blacklist. According to the EU, Panama has not done
enough to tighten legislation after the scandal with the
Panama Papers. Panama is now one of twelve
countries and territories blacklisted by the EU.
The Panama documents refer to a total of 11.5 million
documents that were leaked in 2016 from the law firm
Mossack Fonseca, which had its headquarters in Panama
and specialized in financial offshore operations. Panama
was thus at the center of a disclosure of widespread tax
fraud and fraud by a wide range of individuals,
companies and banks worldwide (see also Current Policy).
Panama is one of the few countries in the world that
does not print its own banknotes. The country's
currency, the balboa, exists as coins, but the banknotes
used are US dollars. The Balboan is locked to the dollar
at a fixed exchange rate, which limits Panama's monetary
policy room to maneuver as the country cannot write up
or down the value of the currency.
FACTS - FINANCE
GDP per person
US $ 15,575 (2018)
US $ 65,055 million (2018)
3.7 percent (2018)
Agriculture's share of GDP
2.2 percent (2018)
Manufacturing industry's share of GDP
5.8 percent (2018)
The service sector's share of GDP
65.1 percent (2018)
0.0 percent (2019)
Government debt's share of GDP
39.5 percent (2018)
US $ 14,753 million (2018)
US $ 23,963 M (2018)
- US $ 5,067 million (2018)
Commodity trade's share of GDP
53 percent (2018)
Main export goods
bananas, gold, pineapple, scrap, melons, sugar
Largest trading partner
USA, Costa Rica, China, Canada, Netherlands, Germany,