Panama

Panama is known for its rich biodiversity and various ecosystems, including tropical rainforests, cloud forests, and numerous islands in the Atlantic and Pacific Oceans. The country has also experienced sustained economic growth and is an important international logistics hub. However, these benefits exist alongside significant social and territorial inequalities.

While there has been progress in reducing poverty, inequality remains a significant issue, particularly between urban and rural areas, as well as between the Indigenous population and the rest of the country. A large portion of employment is concentrated in low-productivity and highly informal sectors, restricting social mobility and access to social protection.

Access to quality public services such as education, healthcare, water, and sanitation is uneven, affecting rural, Indigenous, and Afro-descendant communities. Women, especially Indigenous women, encounter greater barriers to accessing education, employment, and basic services, which perpetuates gender gaps and limits their potential development.

Panama also faces significant environmental challenges. Environmental pressures and natural disasters threaten key sectors, including the Panama Canal, energy, tourism, and agriculture, with the most significant impact felt by vulnerable communities. Sustainable management of natural resources and adaptation to climate change are crucial for the country's future.

One year into the José Raúl Mulino government, the country faces notable challenges, including fiscal pressures, uncertainties related to mine closures, and drought risks that could affect Canal revenues. To address these issues, it is essential to strengthen institutions, improve public management, invest in human capital, and promote inclusive and resilient growth. By doing so, Panama can work towards more equitable and sustainable development.

Last Updated: Apr 16, 2026

Read More

Read Less

In 2025, Panama recovered its growth, reaching gross domestic product (GDP) growth of 4.4 percent, driven mainly by the services sector (trade, transport, logistics, and financial services) and supported by solid demand in a context of fiscal consolidation that reduced public spending.

In 2026, the economy is projected to slow to 3.9 percent amid lower global trade dynamism, with moderately higher inflation, at around 1.5 percent. Over the medium term, in 2027–2028, growth is expected to reach 4.1 percent, supported by domestic demand and the normalization of economic activity.

Regarding poverty data in Panama (US$8.30 per day, 2021 PPP), the poverty rate declined from 19.8 percent to 19.1 percent between 2024 and 2025, after remaining close to 20 percent since 2021 following the post pandemic slowdown. This reduction was driven by the recovery of economic growth in 2025, although its impact remains limited by a weak labor market and high levels of informality.

Panama achieved marked fiscal consolidation in 2025: the fiscal deficit fell from 7.4 percent in 2024 to 3.7 percent of GDP in 2025. This adjustment reflected stronger tax enforcement, higher Canal related revenues, the postponement of capital investments, and a pension reform that improved the liquidity needs of social security funds. Public debt reached approximately 65.6 percent of GDP as of December 2025.

Looking ahead, Panama faces the challenge of strengthening fiscal stability, diversifying sources of growth, promoting inclusive development, and generating quality jobs. Sustained recovery will depend on its ability to boost investment, improve spending efficiency, and promote greater social inclusion; likewise, the country can consolidate its position as a regional logistics and financial hub, provided it advances structural reforms and maintains market confidence.

On the other hand, several factors could affect growth prospects, including a more uncertain international environment, climate risks, and more restrictive global financial conditions, which could affect economic activity in the short and medium term. Likewise, if Panama continues to make sustained progress in fiscal reforms aimed at strengthening public revenues, the country’s growth could be positively affected.

Last Updated: Apr 16, 2026

Read More

Read Less

In 2024, the World Bank Group Board of Directors endorsed the Panama Country Partnership Framework 2024–2028, aimed at supporting job creation, promoting inclusion, diversifying the economy, strengthening human capital, improving basic services, and increasing resilience to crises.

As of March 2026, the portfolio of the International Bank for Reconstruction and Development (IBRD) amounts to US$1.3 billion, distributed across seven projects focused on disaster risk management, Indigenous Peoples development, public financial management modernization, sustainable rural development, and biodiversity conservation, complemented by technical assistance.

As of February 2026, the portfolio of the International Finance Corporation (IFC) amounts to US$366 million, allocated to projects supporting access to housing, financial inclusion for women led enterprises, green finance, and infrastructure linked to the Panama Canal, as well as initiatives to expand trade finance and support public private partnerships.

The portfolio of the Multilateral Investment Guarantee Agency (MIGA) reaches US$1.7 billion, distributed across four projects that support fiscal management and growth, access to housing finance, and financing for micro, small, and medium enterprises, with a focus on households and women led businesses.

Over the past five years, the World Bank has supported key advances in Panama, strengthening the health system through the provision of supplies and equipment for intensive care units and laboratories, support for immunization programs, and the expansion of telemedicine services, as well as the formulation of the Risk Management Policy and the strengthening of institutional capacity.

Through the Indigenous Peoples Development Project, schools and health centers have been built, promoting intercultural education, traditional medicine, and access to safe water. In parallel, the first National Universal Accessibility Plan was developed, led by SENADIS with multisectoral participation, to advance toward greater inclusion of the population.

Last Updated: Apr 16, 2026

Read More

Read Less

The Country Partnership Framework (CPF) for 2024–28 between Panama and the World Bank Group outlines a collaborative strategy aimed at promoting inclusive, resilient, and sustainable growth. It focuses on three primary objectives:

1. Inclusive Job Creation: This involves improving access to finance for women and small and medium-sized enterprises (SMEs), promoting sustainable tourism, and supporting agribusiness.
2. Strengthening Human Capital and Basic Services: The CPF prioritizes health, education, and water services, particularly for vulnerable populations.
3. Enhancing Resilience to Natural Disasters and Climate Change: This goal encompasses the sustainable management of natural resources and improved institutional preparedness.

Two cross-cutting pillars support the framework: institutional strengthening and social inclusion.

The CPF is grounded in the 2023 Systematic Country Diagnostic, which identifies key structural challenges such as low productivity, inequality, high informality, and vulnerability to climate change. The World Bank Group aims to focus its support on areas where it has a comparative advantage, facilitating collaborative solutions among the World Bank, the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). Additionally, the strategy includes enhancing public investment management, fostering public-private partnerships, and implementing more effective social protection mechanisms.

You can download the CPF here

Read More

Read Less