Panama: Country and Foreign Investment
Economy and Currency
The unit of currency used in Panama is the Balboa (PAB), which is pegged at parity to the dollar. There is no Panamanian paper currency and the US dollar is the de facto official currency for all but minor transactions. As a result, the Government cannot print money, inflation is estimated to have risen to 5.9% in 2011 (3.5% est. in 2010).
Leaving aside the difficult subject of drugs, the economy in Panama is focussed on banking, mining, commerce and tourism, with the canal and the shipping business generally playing an important role. The Government has introduced many investment incentives (see below). Copper mining began to have significance only quite recently, but Panama is now emerging as one of the world's major producers, with gold mining also making a contribution.
The Colon Free Trade Zone (see below) has enjoyed major success, and now accounts for around 10% of GNP. Other free trade areas are being created.
Under Torrijos Panama enjoyed something of a boom; growth exceeded 10% in 2007 and was 8.3% in 2008. Inevitably, the world financial and economic crisis dampened growth in 2009, falling to 3.9% (est), rising to an estimated 7.6% in 2010 and 10.6% in 2011.
GDP per head was US$13,600 (2011 est) at Purchasing Power Parity and unemployment levels are at 4.5% (2011 est). As of 2011, Panama's GDP at Purchasing Power Parity was valued at US$50.25bn.
Panama is a well-located, well-endowed and well-educated country which has been held back by corrupt and ineffective leadership. If the Government manages to continue with business-friendly and liberal policies, the country will be successful.