ECONOMY
Panama's economy is based primarily on a well-developed services sector that accounts for nearly 80% of GDP. Services include the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, tourism, and medical and healthcare.
In October 2006, Panamanians voted in favor of a $5.25 billion Canal expansion
project to construct a third set of locks, which is expected to take eight to
ten years to complete. The Government of Panama expects the project to be a
transforming event for Panama that will provide 7,000-9,000 direct new jobs
during the peak construction period of 2009-2011 and set the tone economically
for years to come. The expansion is expected to be financed through a
combination of increased tolls and debt.
GDP growth in the first three months of 2007 was 9.4%, surpassing most private
and government projections and the robust growth seen in 2006 and 2005, which
was 8.1% and 6.9%, respectively. Growth has been fueled by the construction
sector, transportation, port and Panama Canal-related activities, and tourism.
Though Panama has the highest GDP per capita in Central America, about 40% of
its population remains mired in poverty.
Panama has bilateral free trade agreements with Chile, El Salvador, Taiwan, Singapore, Honduras, and Costa Rica. Panama is exploring free trade negotiations with Mexico and other Latin American countries. The U.S. and Panama signed a Trade Promotion Agreement (TPA) in June 2007. Panama ratified the agreement in July 2007; it still requires U.S. congressional approval to enter into force. This agreement will promote economic opportunity by eliminating tariffs and other barriers to trade of goods and services.
GDP (2006, nominal): $15 billion.
Annual growth rate: (2005) 6.9%; (2006) 8.1%; (first 3 months of 2007) 9.4%.
Per capita GDP (2006): $4,611.
Natural resources: Timber, seafood, copper.
Services (80% of GDP): Finance, insurance, health and medical, transportation, telecommunications, the Canal and maritime services, tourism, Colon Free Zone, public administration, and general commerce.
Agriculture and fisheries (7.4% of GDP): Products--bananas and other fruit, corn, sugar, rice, coffee, shrimp, timber, vegetables, livestock.
Industry/Manufacturing (12.7% of GDP): Types--food and drink processing, petroleum products, chemicals, paper and paper products, printing, mining, refined sugar, clothing, furniture, construction.
Trade (2006): Exports--$1 billion: bananas, petroleum products, shrimp, sugar, coffee, and clothing. Major markets--U.S. 38.4%. Imports--$4.8 billion: capital goods, crude oil, foodstuffs, chemicals, other consumer and intermediate goods. Major suppliers--U.S. 26.8%. U.S. goods exports to Panama in 2006--$2.7 billion; first 6 months of 2007--$1.67 billion. U.S. goods imports from Panama 2006--$378.7 million; first 6 months of 2007--168 million.
