Doing Business in Panama

Due to its central location, excellent connections and favorable business climate, Panama has been dubbed the ‘Hub of the Americas’. The country on the isthmus is a regional trade, logistics and financial center that has attracted many Dutch businesses. Companies such as Philips, Van Oord, Boskalis and Unilever have their regional head office here. But also many small companies are successful in Panama.

The country ranks as the fastest growing economy in Latin America with growth rates above 5% every year for the past decade (up till 2017). In addition, it also has the highest GDP per capita (PPP) of Latin America. Inflation and unemployment rates are the lowest of the region.

 

The economy of Panama is based mainly on the services sector, which comprises almost 70% of Panama’s GDP. Services include transport (the Panama-Canal, the goverment’s most important revenue source), banking, commerce, the Colon Free Trade Zone, insurance, container ports, flagship registry and tourism.

The next largest sector is industry (29,2% of GDP) which is not very developed. The biggest chunk is related to mining. The country has the 9th largest copper ore reserve in the world, as well as large reserves of gold, manganese, and iron. Other large industrial activities are agroindustry, textiles, petroleum products, chemicals, paper and paper products.

Finally, the agriculture sector that forms only a 2,2% of GDP but employs 14% of the labour force. Panama produces mainly bananas and different watermelons, pineapples, different kinds of vegetables, maize, sugarcane, rice, coffee, cocoa beans, potatoes, coconuts, soybeans, timber, livestock and shrimp.

Panama’s economy is a fully dollarized with the US dollar being legal tender in the country (same value as the national currency Balboa). Unlike many other Latin-American economies, Panama is a high-income economy.