The Economy in Panama

Economy in Panama 

Panama’s dollarized economy rests primarily on a well-developed services sector that accounts for three-quarters of GDP. Services include operating the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism. Economic growth will be bolstered by the Panama Canal expansion project that began in 2007 and is scheduled to be completed by 2014 at a cost of $5.3 billion—about 25% of current GDP. The expansion project will more than double the Canal’s capacity, enabling it to accommodate ships that are now too large to transverse the transoceanic crossway, and should help to reduce the unemployment rate.

Panama’s aggressive infrastructure development projects will likely lead the economy to continued growth in 2015. Strong economic performance has not translated into broadly shared prosperity as Panama has the second worst income distribution in Latin America. About 30% of the population lives in poverty, however, during Torrijo’s term poverty was reduced from 40% to 30% and unemployment dropped from 12% to 6%.