Panama Economic Outlook
A regional economic powerhouse:
Panama is one of Latin America’s most dynamic economies, with a GDP of over $70 billion and a track record of strong growth. The country has consistently outperformed regional peers, averaging annual GDP growth of 5–6% over the past two decades, driven by the Panama Canal, financial services, and logistics. However, the COVID-19 pandemic hit the economy hard, causing a record contraction of 17.9% in 2020 before rebounding with double-digit growth in 2021.
Panama Canal and logistics at the core:The Panama Canal is the backbone of the country’s economy, generating around 6% of GDP through toll revenues and related services. The expansion of the canal in 2016 has strengthened Panama’s role as a global trade hub, benefiting from increasing maritime traffic between Asia and the Americas. Additionally, the country’s Colón Free Trade Zone—the second-largest in the world—supports trade and re-export activities, further cementing Panama’s status as a logistics powerhouse.
Banking, infrastructure, and investment-friendly climate:Panama has a well-developed financial sector, serving as a regional banking center with strong foreign investment inflows. The country uses the U.S. dollar as its official currency, which helps ensure macroeconomic stability and low inflation. Infrastructure investment has been a major driver of growth, with projects such as the Metro system in Panama City and large-scale real estate developments attracting both domestic and foreign capital. However, the financial sector has faced scrutiny over transparency concerns, with the country being placed on the EU’s financial "gray list" due to weak anti-money laundering controls.
Challenges and structural risks:Despite its strong growth, Panama faces persistent income inequality, high informality in the labor market, and rising fiscal pressures. The government’s debt burden has increased, reaching nearly 60% of GDP, partly due to pandemic-related spending. Additionally, social unrest over inequality and environmental concerns, including mining projects and water shortages affecting the canal, pose risks to long-term stability.
Panama’s economic forecasts:The country is expected to continue outperforming Latin America, with Panama’s economic growth projected at 4–5% in the coming years. The canal, logistics sector, and financial services will remain key drivers, while infrastructure expansion and nearshoring trends could further boost investment. However, Panama must address governance concerns, improve fiscal discipline, and tackle social inequalities to ensure sustained and inclusive economic growth. U.S. threats to seize the canal if Panama doesn’t do enough to curb Chinese influence are an additional factor to watch.
Panama's Macroeconomic Analysis:
Nominal GDP of USD 86.3 billion in 2024.
Nominal GDP of USD 83.3 billion in 2023.
GDP per capita of USD 19,126 compared to the global average of USD 10,589.
GDP per capita of USD 18,711 compared to the global average of USD 10,589.
Average real GDP growth of 4.7% over the last decade.
Average real GDP growth of 4.7% over the last decade.
Sector Analysis
In 2022, services accounted for 67.9% of overall GDP, manufacturing 4.7%, other industrial activity 25.0%, and agriculture 2.4%. Looking at GDP by expenditure, private consumption accounted for 46.1% of GDP in 2022, government consumption 12.8%, fixed investment 41.2%, and net exports -0.1%.International trade
In 2023, manufactured products made up 4.0% of total merchandise exports, mineral fuels 0.3%, food 17.4%, ores and metals 76.5% and agricultural raw materials 1.3%, with other categories accounting for 0.5% of the total. In the same period, manufactured products made up 62.6% of total merchandise imports, mineral fuels 20.1%, food 16.3%, ores and metals 0.6% and agricultural raw materials 0.3%, with other goods accounting for 0.1% of the total. Total exports were worth USD 19.10 billion in 2024, while total imports were USD 25.10 billion.Main Economic Indicators
Economic growthThe economy recorded average annual growth of 4.7% in the decade to 2023. To read more about GDP growth in Panama, go to our dedicated page.
Fiscal policy
Panama's fiscal deficit averaged 3.7% of GDP in the decade to 2023. Find out more on our dedicated page.
Unemployment
The unemployment rate averaged 6.7% in the decade to 2023. For more information on Panama's unemployment click here.
Inflation
Inflation averaged 0.9% in the decade to 2024. Go to our Panama inflation page for extra insight.
Exchange Rate
From end-2014 to end-2024 the balboa stayed on the same level vs the U.S. dollar. For more info on the balboa, click here.
Economic situation in Panama
The economy likely ended 2024 with a spring in its step: In Q4, economic activity growth rose to more than double Q3’s level. Activity in the Panama Canal normalized from the recent drought, and goods exports rebounded in November–December after having declined for a year, flattered by a low base effect; the Cobre Panama copper mine shut down in November 2023, and exports of the commodity comprise about 80% of all shipments. In Q1, annual GDP growth was likely robust. In January, economic activity growth was among the highest seen in the last year as momentum rose in most subsectors. Activity in the Panama Canal also picked up from Q4 through February. Meanwhile, the government could soon resume talks with First Quantum to restart copper output at Cobre Panama after the firm dropped its arbitration claim against Panama on 1 April. This could support exports but also reignite social unrest.Panama Economic Forecasts
Projections out to 2034.43 indicators covered including both annual and quarterly frequencies.
Consensus Forecasts based on a panel of 20 expert analysts.
Want to get insight on the economic outlook for Panama in the coming years? FocusEconomics collects projections out to 2034 on 43 economic indicators for Panama from a panel of 20 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Panama economy. To download a sample report on the Panama's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.