Few countries, and certainly countries of its size, have commanded the strategic importance of Panama. Around 1,000 ships a month pass through the Panama Canal, amounting to five per cent of global maritime trade.
Since control of the Canal fell to the Panamanian authorities in 1999, the country has gone from strength to strength. The capital, Panama City, has been transformed into a thoroughly modern metropolis, with a high-rise skyline to rival many economic powerhouses elsewhere.
The economy is robust, with GDP growth exceeding expectations in 2023 at 7.5 per cent. Employment figures have steadily risen over the last 30 years, and poverty is down.
Thanks in large part to the forests that cover two thirds of the country, Panama was one of the first carbon negative countries in the world.
A key player in the global supply chain
The country’s natural and manmade assets, along with its unbeatable geographical location, have enabled Panama to become a world-class logistics hub, with access to major markets around the world.
The Panama Canal is the world’s most strategic waterway, connecting the Atlantic and Pacific oceans from east to west and serving as a key transit point for global trade. It is at the heart of 180 sea routes, connecting 170 countries and 1,900 ports. Colón at the northern end and Balboa at the southern tip are Latin America’s two most transited ports.
From north to south, Panama connects two continents: North and South America. Its roads and railways allow goods to move easily and rapidly between countries. Tocumen International Airport is of growing importance in the region and saw nearly 18 million passengers in 2023.
In addition to its connectivity advantages, Panama provides a politically and economically stable environment in which businesses can thrive. With a currency pegged to the dollar and free trade zones that offer tax incentives and other benefits, the country is famously business-friendly.
Investment in agricultural productivity
Agribusiness makes up more than half of Panama’s national industry and a third of its exports thanks to a varied landscape and dependable climate, along with a raft of regulatory measures promoting the industry.
Its rainforests, mountainous terrain, fertile plains and easily accessed coastline make for a great deal of variety, including livestock and seafood, and lessen the risks involved in focusing on any given crop. Panama is perhaps best known for the cultivation of tropical fruits – principally bananas, mangos, pineapples and papayas – but sugar cane and rice are also exported in significant amounts.
The quality of Panama’s coffee beans is world-renowned, with the Geisha varietal commanding high prices among connoisseurs and kickstarting coffee tourism as an activity in its own right.
With agriculture seen as an important factor for economic growth, a stimulus law has introduced on the establishment of agroparks. This is expected to transform and expand the industry even further, with financial bonds to boost business and the setting up of a government body to simplify official procedures and ease the export process.
Embracing the IT revolution
Thanks to the six underwater fibre-optic cables converging in the isthmus, Panama has a relatively high rate of internet penetration (67.5 per cent in 2021, up from just 32 per cent in 2010). Four additional cables will be installed in 2025 and 2026.
With the Digital Agenda, introduced in 2020, the country should see access and speeds continue to rise. The objectives of the Agenda include the reduction of the inequality gap, increased competitiveness, and a boost to innovation and collaboration between private and public sectors.
In addition to promoting digital literacy, investment and financial incentives have meant a surge in startups, tech companies and innovation hubs. A new regulatory framework seeks to facilitate financial innovation via cutting-edge technology, and to update the tax mechanisms that underpin the digital economy.
The creation of a short-term visa for remote workers will streamline the recruitment process for companies in the process of nearshoring, allowing foreigners to work for an initial period of nine months, extendable by another nine. The visa will be available to freelancers as well as those on a contract.
A burgeoning tourism industry
Panama’s natural and cultural attractions, not to mention its long sandy beaches, have made it a magnet for both leisure and events industry tourism.
Its stunning landscape is home to an abundance of flora and fauna, and creates the perfect setting for activities from snorkelling to birdwatching. Eco-tourism is increasingly popular, with ample opportunities for hikes through the rainforest and boat trips, followed by a stay in an eco-lodge.
Culturally, too, Panama has plenty to offer. There is little to no tourist overcrowding, meaning that authentic experiences are easy to come by. Indigenous tribes are still found in the more remote areas and islands, and the country’s colonial architecture enlivens many streets.
The Panama Tourism Authority has created a Sustainable Tourism Master Plan to ensure the quality of the services and experiences the country offers visitors, and in order to move towards a mindful and environmentally aware model for the future.
Panama is an outstanding destination for major events, and convention tourism is an important economic engine for the country. It has a wide range of modern facilities, such as the new Panama Convention Center (PCC) in Amador, on the shores of the Panama Canal.
A regional energy hub
Indivisible from its ambitious plans across the logistical, agricultural, digital and tourist sectors are the country’s goals to combat climate change and reduce reliance on fossil fuels.
Panama is blessed with plentiful sources to create renewable energy, whether it be solar, water or wind powered. Thanks to a national energy plan, hydroelectric power now generates a large percentage of the country’s clean energy, and investment is pouring into solar and wind farms. The Penonomé Wind Park alone generates around 5.4 per cent of the country’s electricity requirements.
The National Strategy for Electric Mobility is another recent initiative to promote low-emission transport, to discourage fossil-fuel vehicles and encourage the use of electric cars and buses. At present the plan looks likely to ensure that, by 2030, 10 to 20 per cent of private vehicles will be electric, along with 15 to 35 per cent of buses.
Panama is also looking beyond its borders, to help other Central American countries with their own energy needs. A liquefied natural gas plant has made it possible to store and export enough gas to make it a key player in the continent’s energy integration.
