Detailed Review of Panama’s Economy
It cannot be said that Panama has suffered from the 2008 global economic crisis since its growth has never halted. This is due, in particular to many public investments. The country’s growth is estimated for the year 2014 at 6.3%.
Panama is a country where services are very important and comprises the majority of its economy, employing more than 60% of the workforce. Within the tertiary sector, the following areas are the most important: telecommunications, finance, insurance, transport, health, tourism, and maritime services. The secondary sector, industry, is less prevalent and accounts for 17% of GDP, with food preparation the main area.
Agriculture still accounts for 6% of GDP (and 15% of the workforce). Panama produces mainly bananas, vegetables, corn, sugar, rice, meat, and shrimp. The country has few natural resources, which are limited to wood, copper and gold.
The country is also a major international trader, due to the 77 km-long Panama Canal, which was completed in 1914 and enables ships to cross directly from the Atlantic to the Pacific. The Colon Free Zone is one of the largest free trade areas in the world, slightly behind Hong Kong.
Panama’s main trading partners are the United States, the Netherlands, Spain, Mexico and China, with international trade accounting for 25% of national GDP.
Panama’s Economic Strengths
- The country’s economy is stable and has sustained growth.
- Panama is an ally of the United States.
- Taxes are low.
- Loans are encouraged.
- The real estate sector is very active.
- It is easy to create a company in tourism and manufacturing.
Panama’s Economic Weaknesses
- Freedom of employment is not guaranteed.
- Corruption is rife.
- The legal system is slow and unresponsive.
The Panamanian government promotes the establishment of foreign companies, which it regards as native Panamanian companies, and offers various tax benefits.