Table of Contents
|Location and Size||Credit and Collections|
|Legal System||Business Climate|
Location and Size
Panama, located in Central America between Colombia and Costa Rica, is on the southwest end of the isthmus connecting North and South America. The company borders both the Caribbean Sea and the North Pacific Ocean. Its area is 75,420 sq. km., making it slightly smaller than South Carolina.
Panama’s government is a constitutional democracy made up of 9 provinces and 3 indigenous territories.
- Executive: Chief of state and head of government President Laurentino “Nito” CORTIZO Cohen; Vice President Jose Gabriel CARRIZO Jaen
- Legislative: Unicameral National Assembly with 71 seats; 45 members are elected by popular vote to serve 5-year terms
- Judicial: Supreme Court of Justice (nine judges appointed for staggered 10-year terms); five superior courts; three courts of appeal
Panama has a civil law system.
The country accepts compulsory International Court of Justice (ICJ) jurisdiction with reservations.
- Population: 4,337,768 (2022 est)
- Population growth rate: 1.5% (2022 est.)
- Languages: Spanish (official), Buglere, other indigenous languages
- Literacy: 94.2% (2022 est.)
- Ethnic Make-up: Mestizo (65%), Native American (12%), and other (23%).
- Religions: Roman Catholic (48%), Evangelical (30%), other (4.7%)
Panama has a mixed economic system including private enterprise, combined with centralized economic planning and government regulation.
Panama’s dollar-based economy rests primarily on a well-developed services sector that accounts for three-quarters of GDP. Services include operating the Panama Canal, logistics, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism. Economic growth was bolstered by the Panama Canal expansion project. The expansion project more than doubled the Canal’s capacity, enabling it to accommodate ships that were too large to traverse the existing canal.
Panama’s booming transportation and logistics services sectors, along with aggressive infrastructure development projects, have lead the economy to continued growth. Strong economic performance has not translated into broadly shared prosperity, however, as Panama has the second worst income distribution in Latin America. About 30% of the population lives in poverty.
Before the international financial crisis, the Panamanian economy had the highest growth rate in Latin America. The country resisted the international financial crisis as the slowdown of activity interrupted a trend that was overheating the economy.
Leading Markets (2022): US 18.9%, Netherlands 16.6%, China 6.5%, Costa Rica 5.4%, India 5.1%, Vietnam 5%
Leading Exports – Commodities: Bananas, shrimp, sugar, coffee, clothing
Leading Suppliers (2022): US 24.4%, China 9.8%, Mexico 4.9%
Leading Imports – Commodities: Capital goods, foodstuffs, consumer goods, chemicals
Top Industries: Construction, brewing, cement and other construction materials, sugar milling
Top Agricultural Products: Bananas, rice, corn, coffee, sugarcane, vegetables; livestock; shrimp
Comparative Economic Indicators – 2022
|Panama||Costa Rica||El Salvador||Guatemala||Honduras||Nicaragua|
|Population growth rate (%)||1.53%||1.01%||0.57%||1.58%||1.19%||0.92%|
Age Structure (%)
(15 to 54 years old)
Age Structure (%)
(65 + years old)
|Unemployment rate (%)||6.14%||8.10%||7.00%||2.30%||5.60%||6.40%|
|Population below poverty line (%)||22.10%||21%||22.80%||59.30%||48.3%||24.90%|
|GDP** (USD billions)||$104.10||$100.25||$52.26||$141.50||$50.89||$34.98|
|GDP real growth rate (%)||5.40%||3.30%||2.30%||2.80%||4.80%||4.90%|
|GDP per capita** (USD)||25,400||19,700||8,100||8,400||5,100||5,300|
|Public debt (% of GDP)||37.80%||48.90%||67.90%||24.70%||39.50%||33.30%|
|Exports (USD billions)||$20.18||$21.20||$6.29||$13.12||$7.16||$5.34|
|Imports (USD billions)||$17.41||$19.39||$10.82||$19.30||$11.50||$5.94|
|Reserves of foreign exchange and gold (USD billions)||$2,703.0||$7.15||$3.56||$11.77||$4.70||$2.75|
|Exchange rates (per USD) 11/22/2022||1.0||573.50||8.7||7.32||23.74||30.11|
|Exchange rates (per EUR) 11/22/2022||1.12||639.79||9.78||8.58||27.37||37.46|
*November 2022 estimates
Economic Data from CIA World Factbook
Credit and Collections
Note: It is not possible to obtain a credit report in Panama without the prior permission of the potential customer. If the company won’t give you permission to obtain a credit report, you might assume that there is a problem.
Panama’s commercial law is comprehensive and well-established. Its bankruptcy law is antiquated and remains under review to be adapted to modern business practices.
Panama has no treaties regarding the collection of foreign judgments. Therefore, the process is extremely difficult, time consuming, expensive, and unlikely to end in the creditor’s favor.
Panama has a court and judicial system built around a civil code. Fundamental procedural rights in civil cases are broadly similar to those available in U.S. civil courts. The business community, however, lacks confidence in the Panamanian judicial system as an objective, independent arbiter in legal or commercial disputes.
The court system is slow and prone to massive case backlogs and corruption.
Coface Country Rating: A4 — A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behavior. Corporate default probability is still acceptable on average.
Coface Business Climate Rating: A4
Panama has historically served as the crossroads of trade for the Americas. Its strategic location as a land bridge between two oceans and the meeting of two continents has made Panama not only a maritime and air transport hub, but also an international trading, banking, and services center.
Economic Freedom: Panama’s overall score of 65.4 in the 2022 Index of Economic Freedom gives it a world rank of #56 out of 180 countries. It’s score is above the world and regional averages.
Market Access: When Panama joined the WTO , the government lowered tariffs to a maximum of 15%, except for a few agricultural products, and to an overall average of 12%, the lowest in the region.
No import licenses are required in Panama. Any company holding a commercial license can freely import goods into Panama. A commercial or industrial license is required by individuals or companies wishing to engage in commercial or industrial activities.
Regulatory System: U.S. businesses are concerned about the responsiveness and transparency of most regulating agencies.
Intellectual Property Rights: Panama has an adequate and effective domestic legal framework to protect and enforce intellectual property. However, given Panama’s role as a transshipment point and limited resources dedicated to addressing IPR issues, there remains concern that the Colon Free Zone is a conduit for trading in pirated and counterfeit goods.
Exchange Control: Panama has no restrictions on the outflow of capital or outward direct investment. Panama uses the U.S. dollar as legal tender. Currency conversion therefore is not an issue.
Corruption: There is evidence of corruption in all levels of the judicial system. Weak administration and accountability among the branches of government facilitates corruption. The general perception is that anti-corruption laws are not applied rigorously and that the government enforcement bodies and courts have lacked effectiveness in pursuing and prosecuting those accused of corruption
Political Violence: Panama’s Constitution provides for the right of peaceful assembly. Various groups including unions, student groups, employee associations, frequently attempt to impede traffic and commerce in order to force agreement to their demands. However, there is no political violence against foreign entities.
- Conservative business suits are appropriate for men. Women should wear a dress or skirt and blouse, and should avoid wearing revealing clothing.
- It is still relatively rare for Panamanian women to be employed in managerial jobs. Therefore, women should be sure to emphasize that they are representing their company.
- Business cards and other material should be printed in Spanish and the visitor’s language.
- In business, conversations generally begin with small talk.
Subscribe to the Credit-to-Cash Advisor
Monthly e-Newsletter — It’s Free
This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries. For further information, contact [email protected].
Historical Exchange Rates: OANDA.com The Currency Site.