Panama is known for its incredible biodiversity and variety of ecosystems, which include tropical rainforests, cloud forests, and numerous islands distributed in both oceans. Thanks to the capacity of its forests to absorb carbon, Panama is one of the few countries in the world—along with Bhutan and Suriname—that maintains a negative carbon balance. Additionally, the country is recognized for its commitment to sustainable development, reflected in its environmental policies. The Panama Canal, a marvel of global engineering that connects the Atlantic and Pacific Oceans, has established the country as an important center for global transportation and trade.
Panama has shown remarkable economic growth over the past 30 years, but it remains one of the most unequal countries in the world. In 2023, the Gross Domestic Product (GDP) grew by 7.4%, reflecting a robust recovery from the global Covid-19 pandemic. However, in 2024, GDP growth slowed to 2.9% due to challenges such as the suspension of activities at a copper mining company and recurring droughts that affected transit through the Panama Canal. Despite these obstacles, the Panamanian economy is expected to regain momentum in 2025, with projected GDP growth of 3.5%, driven by strong domestic demand and the reactivation of public and private investments.
This growth has allowed the country to reduce poverty by 34.6 percentage points since 1991, from 48.2% to 13.6% in 2024, with a per capita income of $6.85 per day (2017 PPP). However, in 2024, poverty saw a slight increase of 0.7% compared to 12.9% in 2023, and significant inequalities persist, especially among indigenous and Afro-descendant communities, as well as deficiencies in access to and quality of public services.
Panama's fiscal deficit reached 7.35% of GDP in 2024, driven by decreased revenues and increased spending. However, a gradual reduction to 3.7% is projected by 2027, thanks to fiscal consolidation measures. Despite the recent downgrade in credit rating by Fitch, Panama maintains solid access to international markets, supported by its dollarized economy and stable political environment.
Nearly a year into his administration, President Jose Raúl Mulino faces various internal challenges, such as fiscal pressures, uncertainty over the closure of mining operations, challenges in advancing a fiscal reform agenda, and potential new droughts that could impact Canal revenues. These factors could slow consolidation efforts and increase dependence on external debt. Additionally, uncertainty in global trade and new protectionist measures could affect product prices.
Last Updated: Apr 17, 2025
