Economy of Panama

Economy - overview: Because of its key geographic location, Panama's economy is service-based, heavily weighted toward banking, commerce, and tourism. The hand-over of the canal and military installations by the US has given rise to new construction projects. The MOSCOSO administration inherited an economy that is much more structurally sound and liberalized than the one inherited by its predecessor. Even though export demand is likely to remain slack in some key markets - especially the Andean countries - GDP growth in 2000 probably will be 3% to 4%. Key reform initiatives from the previous administration - including the privatization of public utilities - remain uncompleted. Although President MOSCOSO is unlikely to overturn any previous reforms, her populist leanings make it unlikely any new initiatives will be undertaken in the near future. Indeed, the government has failed to formulate a comprehensive economic policy framework, and the only concrete step it has taken by yearend 1999 has been a hike in agricultural tariffs.

Panama's economy is based primarily on a well-developed services sector that accounts for nearly 80% of GDP. Services include the Panama Canal, banking, the Colon Free Zone[?], insurance, container ports, and flagship registry, medical and health, and other business.

A major challenge facing the current government under President Mireya Moscoso[?] is turning to productive use the 70,000 acres of former U.S. military land and the more than 5,000 buildings that reverted to Panama at the end of 1999. Administratively, this job falls to the Panamanian Inter-Oceanic Regional Authority[?] (ARI).

GDP growth for 2000 was about 2.3% compared to 3.0% in 1999. Though Panama has the highest GDP per capita in Central America, about 40% of its population lives in poverty. The unemployment rate surpassed 14% in 2002.

Beginning March 1, 2001, Panama served as host for the 2001-03 Free Trade Area of the Americas negotiations. Additionally, Panama is negotiating free trade areas with Mexico and its Central American neighbors.

GDP: purchasing power parity - $21 billion (1999 est.)

GDP - real growth rate: 4.4% (1999 est.)

GDP - per capita: purchasing power parity - $7,600 (1999 est.)

GDP - composition by sector:
agriculture: 8%
industry: 25%
services: 67% (1997 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: 0.5%
highest 10%: 42.5% (1991)

Inflation rate (consumer prices): 1.5% (1999 est.)

Labor force: 1.044 million (1997 est.)
note: shortage of skilled labor, but an oversupply of unskilled labor

Labor force - by occupation: agriculture 18%, industry 18%, services 64% (1997 est.)

Unemployment rate: 13.1% (1997 est.)

Budget:
revenues: $2.4 billion
expenditures: $2.4 billion, including capital expenditures of $341 million (1997 est.)

Industries: construction, petroleum refining, brewing, cement and other construction materials, sugar milling

Industrial production growth rate: 0.4% (1995 est.)

Electricity - production: 4.523 billion kWh (1998)

Electricity - production by source:
fossil fuel: 25.56%
hydro: 73.78%
nuclear: 0%
other: 0.66% (1998)

Electricity - consumption: 4.329 billion kWh (1998)

Electricity - exports: 13 million kWh (1998)

Electricity - imports: 136 million kWh (1998)

Agriculture - products: bananas, rice, maize, coffee, sugarcane, vegetables; livestock; shrimp

Exports: $4.7 billion (f.o.b., 1999 est.)

Exports - commodities: bananas, shrimp, sugar, coffee

Exports - partners: US 40%, Sweden, Costa Rica, Spain, Benelux, Honduras (1998)

Imports: $6.4 billion (f.o.b., 1999 est.)

Imports - commodities: capital goods, crude oil, foodstuffs, consumer goods, chemicals

Imports - partners: US 40%, Central America and Caribbean, Japan (1998)

Debt - external: $7 billion (1999)

Economic aid - recipient: $197.1 million (1995)

Currency: 1 balboa (B) = 100 centesimos

Exchange rates: balboas (B) per US$1 - 1.000 (fixed rate)

Fiscal year: calendar year

See also : Panama