Economy - overview Because of its key geographic location, Panama's economy is service-based, heavily weighted toward banking, commerce, and tourism. Since taking office in 1994, President PEREZ BALLADARES has advanced an economic reform program designed to liberalize the trade regime, attract foreign investment, privatize state-owned enterprises, institute fiscal reform, and encourage job creation through labor code reform. The government privatized its two remaining ports along the Panama Canal in 1997 and approved the sale of the railroad in early 1998. It also plans to sell other assets, including the electric company. Panama joined the World Trade Organization (WTrO) and approved a tariff reduction that will give the country the lowest average tariff rates in Latin America. A banking reform law was approved by the legislature in early 1998 and will take effect in June. After two years of near stagnation, the reforms are beginning to take root; GDP grew by 3.6% in 1997 and is expected to grow by more than 5% in 1998. The most important sectors driving growth have been the Panama Canal and the shipping and port activities. The Colon Free Zone also rebounded from a slow year in 1996.

GDP purchasing power parity - $18 billion (1997 est.)

GDP - real growth rate 3.6% (1997 est.)

GDP - per capita purchasing power parity - $6,700 (1997 est.)

GDP - composition by sector
agriculture: 8%
industry: 18%
services: 74% (1997 est.)

Inflation rate - consumer price index 1.2% (1997)

Labor force
total: 1.044 million (1997 est.)
by occupation: government and community services 31.8%, agriculture, hunting, and fishing 26.8%, commerce, restaurants, and hotels 16.4%, manufacturing and mining 9.4%, construction 3.2%, transportation and communications 6.2%, finance, insurance, and real estate 4.3%
note: shortage of skilled labor, but an oversupply of unskilled labor

Unemployment rate 13.1% (1997 est.)

Budget
revenues: $2.4 billion
expenditures: $2.4 billion, including capital expenditures of $341 million (1997 est.)

Industries construction, petroleum refining, brewing, cement and other construction materials, sugar milling

Industrial production growth rate 0.4% (1995 est.)

Electricity - capacity 957 million kW (1995)

Electricity - production 3.6 billion kWh (1995)

Electricity - consumption per capita 1,355 kWh (1995)

Agriculture - products bananas, rice, corn, coffee, sugarcane, vegetables; livestock; fishing (shrimp)

Exports
total value: $592 million (f.o.b., 1997 est.)
commodities: bananas 43%, shrimp 11%, sugar 4%, clothing 5%, coffee 2%
partners: US 37%, EU, Central America and Caribbean

Imports
total value: $2.95 billion (c.i.f., 1997 est.)
commodities: capital goods 21%, crude oil 11%, foodstuffs 9%, consumer goods, chemicals
partners: US 48%, EU, Central America and Caribbean, Japan

Debt - external $7.26 billion (1996 est.)

Economic aid
recipient: NA

Currency 1 balboa (B) = 100 centesimos

Exchange rates balboas (B) per US$1 - 1.000 (fixed rate)

Fiscal year calendar year

NOTE: The information regarding Panama on this page is re-published from the 1998 World Fact Book of the United States Central Intelligence Agency. No claims are made regarding the accuracy of Panama Economy 1998 information contained here. All suggestions for corrections of any errors about Panama Economy 1998 should be addressed to the CIA.