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flag Panama Panama: Economic and Political Outline

Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

Economic Indicators

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 rebounded, reaching a growth of 6.2% in 2010 and then 7.4% in 2011, 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. 

Revenues from the Panama Canal represent up 10% of GDP, with port activites and logistics representing further 20%.

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 declining, but informal employment still involves more than 40% of the active population. In 2011, inflation reached 5.5%.

 
Main Indicators 2009201020112012 (e)2013 (e)
GDP (billions USD) 24.0626.8130.2333.3136.28
GDP (Constant Prices, Annual % Change) 3.2e7.5e7.4e7.26.6
GDP per Capita (USD) 6,9447,601e8,4219,1149,750
General Government Gross Debt (in % of GDP) 41.2e38.736.234.833.4
Inflation Rate (%) 2.43.5e5.7e3.53.0
Unemployment Rate (% of the Labor Force) 5.04.54.24.24.2
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

Main Sectors of Industry

Agriculture represents 5% 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 15% 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.

 

Find more information about your business sector on our service Market reports.

 
Monetary Indicators 20062007200820092010
Panamean Balboa (PAB) - Average Annual Exchange Rate For 1 USD 1.001.001.001.001.00

Source: World Bank - Last Available Data.

 

Find out all the exchange rates daily on our service Currency converter.

 
Learn more about Market Analyses about Panama on Globaltrade.net, the Directory for International Trade Service Providers.
 

Indicator of Economic Freedom

Score:
64.9/100
Position:
Moderately free
World Rank:
56/179
Regional Rank:
10/26

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

 

Country Risk

See the Country Risk Analysis Provided By Ducroire.

 

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Foreign Trade in Figures

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.  In 2011, the foreign trade's share was 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, Japan, Germany, Italy and Singapore.

Panama essentially imports electrical equipment & electronics, crude oil, foodstuffs, chemicals, vehicles and pharmaceutical products. Panama's main suppliers are the United States, Japan, 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.

Based on services and an openess to foreign trade, in 2012 the country's economy remains very dependent on the international situation and on global demand.

 
Foreign Trade Indicators 20072008200920102011
Imports of Goods (million USD) 6,8729,0507,8019,14021,600
Exports of Goods (million USD) 1,1641,24794883014,100
Imports of Services (million USD) 2,0652,5612,1182,5693,237
Exports of Services (million USD) 4,8875,7185,4635,6596,811
Imports of Goods and Services (Annual % Change) 18.110.3-5.621.2-
Exports of Goods and Services (Annual % Change) 22.010.3-0.96.2-
Imports of Goods and Services (in % of GDP) 73.975.962.768.9-
Exports of Goods and Services (in % of GDP) 81.281.879.165.0-
Trade Balance (million USD) -3,190-4,546-2,123-4,615-
Trade Balance (Including Service) (million USD) -354-1,341---
Foreign Trade (in % of GDP) 155.1157.7141.8133.9-

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

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

 

Main Products

Main Exports
(% of Exports)
2010
AntibioticsAntibiotics 15.8%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 9.5%
Footwear with outer soles and uppers of rubber or...Footwear with outer soles and uppers of rubber or plastics (excl. waterproof footwear of heading 6401, orthopaedic footwear, skating boots with ice or roller skates attached, and toy footwear) 4.9%
Women's or girls' suits, ensembles, jackets,...Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (excl. knitted or crocheted, wind-jackets and similar articles, slips, petticoats and panties, track suits, ski suits and swimwear) 3.3%
Perfumes and toilet waters (excl. aftershave...Perfumes and toilet waters (excl. aftershave lotions, personal deodorants and hair lotions) 3.3%
See More Products 63.1%
Main Imports
(% of Imports)
2010
AntibioticsAntibiotics 10.3%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses "incl. those in the form of transdermal administration" or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 5.3%
Footwear with outer soles and uppers of rubber or...Footwear with outer soles and uppers of rubber or plastics (excl. waterproof footwear of heading 6401, orthopaedic footwear, skating boots with ice or roller skates attached, and toy footwear) 3.5%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 3.4%
Women's or girls' suits, ensembles, jackets,...Women's or girls' suits, ensembles, jackets, blazers, dresses, skirts, divided skirts, trousers, bib and brace overalls, breeches and shorts (excl. knitted or crocheted, wind-jackets and similar articles, slips, petticoats and panties, track suits, ski suits and swimwear) 2.7%
See More Products 74.8%

Source: Comtrade, Last Available Data

 
 

To go further, check out our service Import export flows.

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Sources of General Economic Information

Ministries
Ministry of Foreign Affairs (Spanish only)
Ministry of Economy and Finance (Spanish only)
Ministry of Commerce and Industry (Spanish only)
Ministry of Public Works (Spanish only)
Statistical Office
Statistics Office (Spanish only)
Central Bank
Ministry of Economy and Finance (Spanish only)
National Bank of Panama (Sapnish only)
Stock Exchange
Panama Stock Exchange
Search Engines
Google.com.pa
Panama1.com
Economic Portals
Panama Canal Authority
Panama Financial Information Standards

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Political Outline

Executive Power
The President is both the chief of state and head of the government. The President is elected by popular vote to serve a five-year term, and has executive powers which include implementation of the law within the country and running the day-to-day affairs. He also appoints the Cabinet.
Legislative Power
The legislature in Panama is unicameral. The parliament, called the National Assembly, has 78 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.
Main Political Parties
Panama's political system is based on a multi-party system with parties having to get along in order to form coalition governments. The country's major political parties are:
- PRD (Democratic Revolutionary Party) – a centre-left political party,
- PA (Panamenista Party) – party is a homage to Dr. Arnulfo Arias Madrid who was president of Panama three times,
- PS (Socialist Party) – a nationalist party,
- Nationalist Republican Liberal Movement – a liberal party,
- PP (People's Party) – Christian democrats,
- PLN (National Liberal Party) – liberals.
Current Political Leaders
President: Martin TORRIJOS ESPINO (since September 2004) –PRD, heads the coalition government with PP
Next Election Dates
Presidential: 2014
National Assembly: 2014
 

Indicator of Freedom of the Press

World Rank:
113/179
Evolution:
32 places down compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

 

Indicator of Political Freedom

Ranking:
Free
Political Freedom:
1/7
Civil Liberties:
2/7

Map of freedom 2010
Source: Freedom House

Note: The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

 

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