Panama

Economic and political outline

Economic indicators | Foreign Trade in figures | Sources of economic information | Political outline

Economic indicators

Panama's economy is based primarily on a well-developed services sector that accounts for nearly 80% of GDP. Services mainly include the Panama Canal, banking, the Colon Free Zone, insurance, and container ports. Certain sectors such as agriculture, manufacturing and building & construction have been declining for several years, resulting into deterioration of the social climate. The GDP growth rate is over 8% since 2006. Unemployment (nearly 15% of the active population), poverty (40% of the population live below poverty line), and corruption are weakening the country. In recent years the country has become a nexus for the shipment of illegal drugs from Colombia to the USA, as well as a centre for drug-related financial transactions.

GDP Indicators	2004	2005	2006	2007	2008
GDP (billions USD)	14.18	15.48	17.10	19.28e	21.80e
GDP (constant prices, annual % change)	7.5	6.9	8.1	8.5e	8.8e
GDP per capita (USD)	4,474.27e	4,799.35e	5,207.76e	5,766.87e	6,406.19e
Inflation rate (%)	0.5	2.9	2.5	3.8e	3.6e
Unemployment rate (% of the labor force)	12.4	10.3	9.1	n.c.	n.c.
Current Account (billions USD)	-1.06	-0.78	-0.65	-1.04e	-1.43e
Current Account (in % of GDP)	-7.5	-5.0	-3.8	-5.4e	-6.6e

Source: IMF - World Economic Outlook Database; ILO, Laborstat - Yearly Statistics

Note: (e) Estimated data

Socio-demographic indicators	2004	2005	2006
Unemployment rate (%)	12.4	10.3	9.1

Source:

Main sectors of industry

Agriculture accounts for almost 8% of the GDP and employs 20% of the active population. The main crops are bananas, coffee and sugar. Panama has limited natural resources; copper being the only commodity that is exported. The industrial sector is modest; it contributes only 17% to the GDP. The main industrial activities rely on food processing, sugar refining, apparel manufacturing, and dairy products. Services sector is the real driving force of the country's economy. The Colón Free Zone, established in 1953, is a centre for foreign investment in manufacturing. Panama Canal (contributes 12% to the GDP) is continuing to generate more and more revenue because of the rise in maritime transport. It has also led to a fast development of the Panamanian banking sector. Panama holds the largest merchant navy fleet in the world.

Breakdown of economic activity by sector	Agriculture	Industry	Services
Value added (annual % change)	2.3	8.8	8.6
Value added (in % of GDP)	7.2	16.5	76.3
Employment by sector (in % of total employment)	15.7	17.2	67.1

Source: World Bank - World Development Indicators - last available data.

Monetary indicators	2002	2003	2004	2005	2006
Average annual exchange rate for 1 USD	1.00	1.00	1.00	1.00	1.00

Source: World Bank - World Development Indicators

Foreign trade in figures

Panama is largely an export-oriented country. Colon free zone which is the second largest free-trade zone in the world after Hong Kong, demonstrates the country's openness to foreign trade. The share of foreign trade in country’s GDP is more than 125%. The top three export partners of Panama are: the USA, Spain and Sweden. The commodities mainly exported are fish & sea products, edible fruits & vegetables, sugar and meat. The top three import partners are: the USA, Costa Rica and Japan. Panama mainly imports mineral fuels & oils, vehicles, machinery, electric & electronic equipment, and pharmaceutical products.

Foreign trade indicators	2002	2003	2004	2005	2006
Imports of goods (millions USD)	6,350	6,274	7,617	8,907	10,310
Exports of goods (millions USD)	5,315	5,072	6,078	7,591	8,509
Imports of services (millions USD)	1,310	1,312	1,460	1,729	1,694
Exports of services (millions USD)	2,278	2,510	2,739	3,144	3,904
Imports of goods and services (annual % change)	0.7	-3.5	14.4	10.8	10.0
Exports of goods and services (annual % change)	-2.5	-10.1	18.5	11.6	11.1
Imports of goods and services (in % of GDP)	62.3	58.5	63.9	68.7	71.1
Exports of goods and services (in % of GDP)	67.5	63.6	67.6	74.8	73.4
Trade Balance (millions USD)	-1,035	-1,202	-1,538	-1,316	-1,801
Trade Balance (including service) (millions USD)	-67	-5	-260	99	409
Current Account (millions USD)	-96	-580	-1,061	-782	-378
Current Account (in % of GDP)	-0.8	-4.5	-7.5	-5.0	-2.2
Foreign trade (in % of GDP)	129.7	122.1	131.5	143.5	144.5

Source: World Bank - World Development Indicators

Main partner countries

Main customers (% of exports)	2006
United States	39.0%
Spain	7.7%
Netherlands	6.3%
Sweden	5.2%
Costa Rica	5.2%

Main suppliers (% of imports)	2006
United States	27.0%
Neth. Antilles	10.1%
Costa Rica	5.1%
Japan	4.7%

Source: 2006

Main products

Main exports (% of exports)	2006
Fish and crustaceans, molluscs	33.8%
Edible fruit and nuts, peel of citrus fruit or melons	28.9%
Live animals	2.8%
Meat	2.2%
Paper	2.2%

Main imports (% of imports)	2006
Mineral fuels, mineral oils	18.0%
Vehicles other than railway or tramway	11.0%
Machinery and mechanical appliances	10.1%
Electrical machinery and equipment	8.1%
Iron and steel	4.3%

Source: 2006

To see more products: More imports (Intracen Data)
More exports (Intracen Data)

Sources of economic information

Ministries: Ministry of Economy and Finance (in Spanish)
Statistical Office: Statistics Office (in Spanish)
Central Bank: National Bank of Panama (in Sapnish)
Stock Exchange: Panama Stock Exchange
Online newspapers: El Panama America (in Spanish)
La Prensa (in Spanish)
Search Engines: Google.com.pa
Panama1.com
Istmania

Political outline

Executive Power: President is both the chief of state and the head of the government. President is elected by a popular vote to serve a five-year term, and enjoys the executive powers which include implementation of the law within the country and running the day-to-day affairs. The Cabinet is appointed by the President.
Legislative Power: The legislature in Panama is unicameral. The parliament called National Assembly has 78 seats, with its members elected by popular vote to serve five-year terms. The legislature is a power branch which is equal to and independent of the executive. Legislative power is vested in both the government and the National Assembly. President cannot dissolve the parliament directly; needs approval of the latter. The people of Panama have considerable political power.
Main political parties: Panama works under a multi-party system, resulting generally into making of coalition governments. The major political parties in the country are:
- PRD (Democratic Revolutionary Party) – a centre-left political party,
- PA (Panamenista Party) – party is a homage to Dr. Arnulfo Arias Madrid who was a three-time president of Panama,
- PS (Solidarity 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, heading a coalition government with PP
Next election dates: Presidential: May 2009
National Assembly: May 2009