Economy of Panama

Overview

Because of its key geographic location, Panama's economy is service-based, heavily weighted toward banking, commerce, and tourism. The hand-over of the canal and military installations by the US has given rise to new construction projects. The Moscoso administration inherited an economy that is much more structurally sound and liberalized than the one inherited by its predecessor. Even though export demand is likely to remain slack in some key markets – especially the Andean countries – GDP growth in 2000 probably will be 3% to 4%. Key reform initiatives from the previous administration – including the privatization of public utilities – remain uncompleted. Although President Moscoso is unlikely to overturn any previous reforms, her populist leanings make it unlikely any new initiatives will be undertaken in the near future. Indeed, the government has failed to formulate a comprehensive economic policy framework, and the only concrete step it has taken by yearend 1999 has been a hike in agricultural tariffs.

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, and flagship registry, medical and health, and other business.

A major challenge facing the current government under President Mireya Moscoso¹ is turning to productive use the 70,000 acres (283 km²) of former U.S. military land and the more than 5,000 buildings that reverted to Panama at the end of 1999. Administratively, this job falls to the Panamanian Inter-Oceanic Regional Authority (ARI).

GDP growth for 2000 was about 2.3% compared to 3.0% in 1999. Though Panama has the highest GDP per capita in Central America, about 40% of its population lives in poverty. The unemployment rate surpassed 14% in 2002.

Beginning March 1, 2001, Panama served as host for the 2001–03 Free Trade Area of the Americas negotiations. Additionally, Panama is negotiating free trade areas with Mexico and its Central American neighbors.

¹ Mireya Moscoso was the president of Panama at the time this article was last edited. The current president is Martin Torrijos.

Statistics

GDP: purchasing power parity – $18.78 billion (2003 est.)

GDP – real growth rate: 4.1% (2003 est.)

GDP – per capita: purchasing power parity – $6,300 (2003 est.)

GDP – composition by sector:
agriculture: 8.3%
industry: 14.7%
services: 77.1% (2003 est.)

Household income or consumption by percentage share:
lowest 10%: 0.5%
highest 10%: 42.5% (1991)

Investment (gross fixed): 24.8% of GDP (2003)

Population below poverty line: 37% (1999 est.)

Household income or consumption by percentage share:
lowest 10%: 1.2%
highest 10%: 35.7% (1997)

Distribution of family income – Gini index: 48.5 (1997)

Inflation rate (consumer prices): 1.4% (2003 est.)

Labor force: 1.19 million
note: shortage of skilled labor, but an oversupply of unskilled labor (2003 est.)

Labor force – by occupation: agriculture 20.8%, industry 18%, services 61.2% (1995 est.)

Unemployment rate: 13.8% (2003 est.)

Budget:
revenues: $2.995 billion
expenditures: $3.421 billion, including capital expenditures of $471 million (2003 est.)

Agriculture – products: bananas, rice, corn, coffee, sugarcane, vegetables; livestock; shrimp

Industries: construction, petroleum refining, brewing, cement and other construction materials, sugar milling

Industrial production growth rate: 7% (2003 est.)

Electricity – production: 4.039 TWh (2001)

Electricity – production by source:
fossil fuel: 25.56%
hydro: 73.78%
nuclear: 0%
other: 0.66% (1998)

Electricity – consumption: 3.681 TWh (2001)

Electricity – exports: 0.118 TWh (2001)

Electricity – imports: 0.043 TWh (2001)

Oil – production: 0 bbl/day (2001 est.)

Oil – consumption: 52,000 bbl/day (2001 est.)

Oil – exports: NA (2001)

Oil – imports: NA (2001)

Current account balance: $-408 million (2003)

Exports: $5.237 billion f.o.b. (2003 est.)

Exports – commodities: bananas, shrimp, sugar, coffee, clothing (1999)

Exports – partners: United States 13.9%, Nigeria 9.8%, Germany 8.1%, South Korea 7.8%, Peru 5.1%, Costa Rica 4.9%, Belgium 4.8%, Japan 4.5% (2003)

Imports: $6.622 billion f.o.b. (2003 est.)

Imports – commodities: capital goods, crude oil, foodstuffs, consumer goods, chemicals (1999)

Imports – partners: Japan 33.2%, US 11.4%, China 9.1%, South Korea 7.7%, Singapore 7.1% (2003)

Reserves of foreign exchange & gold: $1.011 billion (2003)

Debt – external: $8.834 billion (2003 est.)

Economic aid – recipient: $197.1 million (1995)

Currency: balboa (PAB); US dollar (USD)

Exchange rates: balboas per US dollar – 1 (2003), 1 (2002), 1 (2001), 1 (2000), 1 (1999) (fixed rate)

Fiscal year: calendar year

See also

• Panama