Panama Economic Conditions

Butterfly land

Tourism is increasingly important for Panama. It’s not just the Tiger and the Bear in Janosch’s children’s stories that dream of traveling to the butterfly country, as the word Panama appropriately means. Tourism is becoming economically as important as the canal business, and many hungry North Americans and Europeans have opened their eyes to Panama. The authorities have actively promoted the country as a retirement paradise and the elderly guard receives financial benefits such as discounts on various services. For five years in a row, International Living has awarded Panama the title of “World’s Best Retirement Land” and in particular, many North Americans have settled in Panama. In addition, health tourism – medical and cosmetic treatment at half the price – has become an important draw.

Promoting ecotourism has also been an important strategy. The government has wanted to play a participatory role in environmental conservation, including internationally. Panama signed the Kyoto Agreement in 1999, the UN-REDD Agreement on Felling of Tropical Timber in 2009, and hosted the preparation for the climate summit in Durban in 2011. WWF has nevertheless pointed out that uncontrolled logging threatens the tropical forests and that much of the land area is missing concrete protection strategies. Panama’s petroleum dependency is another major challenge. Around 75 percent of energy consumption is based on petroleum. The potential for hydropower development is large, and it is believed that large investments are required to meet the energy needs of the ever-growing business activities connected to the canal.

It lost tax haven

Panama has not only been a haven for tourists and retirees. The possibility of secret bank accounts has made the country an international financial center and secured a place on the OECD’s “blacklist”. In 2011, however, the authorities signed an agreement on greater transparency around the banking business, which removed them from the list of tax havens. In a press release, OECD leader Angel Gurria stated that Panama has worked effectively to meet international standards in this area, but at the same time warned that the OECD will closely monitor compliance with the agreements. Panama now hopes that this will open its doors to new investment.


Panama struggles with uneven distribution of income, and is a school example that strong economic growth alone cannot provide for the welfare of the people. However, poverty has fallen somewhat in recent years and unemployment halved to 6 percent in 2010. In many areas, Panama is far better off than its neighboring countries, especially in terms of education and health; over ninety percent of the population is literate and literate and, according to the CIA World Factbook, there are more doctors and hospital beds per capita than in any other country in Central America. Human Rights Watch also has few cases related to Panama, the latest report being the authorities’ harsh handling of trade union protesters in 2010 when they declared national strikes in protest of a new law restricting trade union activities. In the clash with the police, a worker was killed,

According to,social movements in Panama have recently been particularly concerned with preventing the proposed legislative amendment that facilitates foreign investment in mining, which many for good reason fear will have serious social and environmental consequences. In this case, environmentalists, students, indigenous people and other activists have found a common struggle. Panama’s indigenous population accounts for about ten percent of the population and is divided into seven groups. Many live in areas that will be affected by potential future mining projects. After prolonged pressure from civil society, the authorities in March 2011 declared that Panama would ratify ILO 169 and hopefully this is the beginning of a better relationship between the indigenous population and the state in the years to come.


Capital: Panama City
Population: 3.71 million (2016)
Life expectancy: 78.6 years (2016)
Infant mortality: 10.1 per 1000 (2016)
Religion: Catholicism 85%, Protestantism 15%
Official language: Spanish
GDP per capita (PPP): US $ 22,800 (2016)
Currency unit: balboa and US dollar
Export items: Fruits, nuts, fish, iron, steel waste and wood.
Regional relations: Member of CELAC, OAS, UNSASUR (observer)