Immigraion To Panama

About Panama Where to Live in Panama Economy The People

The Economy

Panamanians have one of the highest per capita incomes in Central America. The country’s economy has been based on the service sector, which is responsible for 70 percent of the GDP (gross domestic product). This sector is composed of the Panama Canal, the banking and insurance industries and the Colon Free Zone. In 1946 Panama’s business oriented environment gave birth to the Colon Free Zone, which today is an international import and re-export center. It is considered the second largest free trade center in the world after Hong Kong.

The banking sector open to foreign investment has converted Panama into the financial capital of Latin America. The presence of U.S. currency in Panama is a key factor in attracting foreign investment. Manufacturing, mining, utilities and construction are responsible for 20 percent of the GDP, while agriculture, forestry and fishing make up the rest of the total GDP (about 9 percent).

In 1995 Panama started its most important change in more than forty-five years. Wide reform of tax incentives and exemptions, labor market reforms, privatization and membership in the World Trade Organization, represented a major break with the interventionist policies that had long kept Panama isolated from free market changes sweeping through the Latin American region.

In the agriculture sector bananas are the most important product and its largest export. Other products include shrimp, sugar, coffee, dairy products and tropical fruits.

The government has made attempts to boost tourism with a variety of incentives and reforms. Tourism has increased especially the number of cruise ships, which dock in Panama while their passengers disembark and tour the country. The new 20 million-dollar Panama Convention Center is expected to attract more visitors. In 2001 the government planned public works programs, tax reforms and new regional trade agreements to stimulate growth.