As the economic and financial center of the country, Panama City’s economy is service-based, heavily weighted toward banking, commerce, and tourism. The economy depends significantly on trade and shipping activities associated with the Panama Canal and port facilities located in Balboa. Panama’s status as a convergence zone for capital from around the world due to the canal helped the city establish itself as a prime location for offshore banking and tax planning. Consequently, the economy has relied on accountants and lawyers who help global corporations navigate the regulatory landscape. The city has benefited from significant economic growth in recent years, mainly due to the ongoing expansion of the Panama Canal, an increase in real estate investment, and a relatively stable Banking Sector. There are around eighty banks in the city, at least fifteen of which are national.

Economic activity logged another sharp expansion in May and the average of the first five months of the year stands at 6.5%, far above last year’s 4.4% growth in the same time period. All available indicators suggests that growth in the second quarter will be robust, buoyed by a double-digit expansion in cargo movements in the January-to-May period and another strong rise in Canal revenues during the same time period. The government unveiled the draft bill of the 2018 budget on 27 July. The budget is 7.9% bigger than the preceding year and envisages large spending on public infrastructure and social services, which should result in economic growth of 6.0% according to the government.

Panama City is responsible for the production of approximately 55% of the country’s GDP. This is because most Panamanian businesses and premises are located in the city and its metro area. It is a stopover for other destinations in the country, as well as a transit point and tourist destination in itself.

Tourism is one of the most important economic activities in terms of revenue generation. This sector of the economy has seen a great deal of growth since the transfer of the Panama Canal Zone at the end of the twentieth century. The number of hotel rooms increased by more than ten-fold, from 1,400 in 1997 to more than 15,000 in 2013, while the number of annual visitors increased from 457,000 in 1999 to 1.4 million in 2011.

Panama still has the second-most unequal income distribution in Latin America.

Comments are closed.