Panama profile

Demography and Health

Panama’s population stands at about 4.56 million in 2024, with life expectancy at birth recorded at 79.6 years in 2023, indicating favorable health outcomes relative to many peers in the region. The age structure, birth rate of 16.0 per 1,000 people (2023) and a crude death rate of 4.77 per 1,000 (2023) suggest a relatively stable demographic dynamic with modest natural increase. The under-5 mortality rate is 13.3 per 1,000 live births (2023), signaling ongoing progress in child health but room for improvement compared with advanced economies. Net migration in 2024 shows a positive inflow of 6,706 people, which can influence labor supply, urbanization, and social services demand, potentially reinforcing Panama’s role as a regional hub attracting workers and talent. On the social front, the poverty headcount at national poverty lines stands at 21.8% (2021), highlighting persistent inequality and the need for inclusive growth strategies. The prevalence of undernourishment is 5.6% (2022), indicating relatively good food security overall but still calling for targeted nutrition programs for the most vulnerable groups.

Health financing appears substantive: current health expenditure is 8.47% of GDP (2022), and domestic general government health expenditure per capita, PPP is about $1,873 (2022), suggesting substantial public investment in health services. The availability of health professionals is indicated by 1.73 physicians per 1,000 people (2021), a figure that may constrain service delivery in certain areas and underscores the importance of policies to expand the health workforce and improve efficiency. The share of the population with internet access (78%) and the broader health indicators together imply that Panama enjoys strong social outcomes in life expectancy and child health, yet it also faces challenges common to middle-income economies: steady poverty reduction, equitable health access across urban and rural areas, and ensuring adequate health workforce capacity to sustain gains in health outcomes over time.

Economy

Panama’s economy is characterized by a high degree of development and openness. GDP per capita stands at $19,103 in 2024 (current US$), while GDP per capita, PPP is $41,405 (2024), underscoring a relatively high standard of living when purchasing power is considered, even as nominal indicators reveal a more nuanced picture. Inflation remains subdued at 0.69% in 2024, supporting price stability for consumers and business planning. The current account balance is modestly positive at 1.94% of GDP in 2024, and foreign direct investment net inflows reach 3.76% of GDP, signaling ongoing external financing and investor confidence. The economy appears to be trade- and services-led, with exports and imports each accounting for roughly equal shares of GDP (46.5% and 43.1% respectively in 2023), indicating a highly integrated economy that relies on external demand and cross-border services. High-technology exports amount to about $1.34 million in 2023, which shows some diversification into knowledge-driven outputs, albeit at a scale that suggests room for growth in cutting-edge sectors. R&D intensity remains modest at 0.158% of GDP (2023), implying that the innovation ecosystem is at an early stage and could benefit from policy incentives and capacity building to augment long-run productivity. Unemployment stands at 6.68% (2023), a moderate rate that reflects structural features of the labor market and the need to expand formal employment opportunities, particularly in knowledge-intensive and export-oriented sectors.

From a governance perspective, regulatory quality sits at 0.119 and the rule of law at −0.346 (2023), with control of corruption at −0.628, indicating a governance environment that is improving in policy design but still facing challenges in law enforcement, judicial independence, and corruption control. These governance dimensions intersect with economic performance by affecting the ease of doing business, the credibility of investment, and the efficiency of public services. The combination of a stable macro backdrop, a favorable inflation path, and a service-trade orientation provides Panama with a solid platform for inclusive growth, provided that policy efforts strengthen institutions, deepen the innovation ecosystem, and expand employment and income opportunities for a broader portion of the population.

Trade and Investment

Trade and investment dynamics reinforce Panama’s role as a regional logistic and services hub. Exports of goods and services account for 46.5% of GDP in 2023, while imports represent 43.1% of GDP, signaling an economy deeply engaged in regional and global supply chains. Foreign direct investment net inflows reach 3.76% of GDP in 2024, illustrating persistent external financing and confidence from international investors, particularly in sectors linked to logistics, energy, and services. The current account balance remains positive at 1.94% of GDP (2024), reinforcing macro stability and resilience to external shocks. The high-technology export figure, while not large in absolute terms (about 1.34 million current US$ in 2023), demonstrates a trajectory toward more knowledge-intensive outputs alongside traditional trade activity. Panama’s logistics strength is underscored by a Logistics Performance Index score of 3.3 (2022), with a relatively high ranking of 13, reflecting efficient trade, transport, and border procedures that facilitate canal-related activity and regional commerce. The combination of strong trade openness, steady FDI inflows, and a well-functioning logistics base positions Panama to deepen integration into global value chains, although progress in domestic research and development and in protecting intellectual property would help sustain longer-term competitiveness and economic diversification.

Governance and Institutions

Panama’s governance indicators reveal a mixed institutional landscape. Political stability and absence of violence/terrorism score 0.213 (2023), which suggests a relatively stable political environment that can support policy implementation and investment. Regulatory quality is moderately positive at 0.119 (2023), indicating some capability to design and enforce policies that support market functioning. However, the rule of law is negative at −0.346 (2023), and control of corruption is −0.628, signaling gaps in judicial effectiveness and anti-corruption outcomes. Government effectiveness sits at −0.21 (2023), highlighting challenges in delivering public services efficiently. This combination points to an environment where good governance and predictable policy exist alongside persistent weaknesses in the legal framework, enforcement, and corruption controls. For investors and domestic stakeholders, these indicators imply that progress will hinge on strengthening judicial independence, reducing corruption, and improving regulatory implementation. In parallel, Panama’s strong trade and logistical backbone could be leveraged to drive reforms that enhance governance—if policy credibility and institutional capacity are simultaneously advanced—supporting sustained growth and more inclusive development outcomes.

Infrastructure and Technology

Panama displays notable infrastructure and technology capabilities that reinforce its role as a global trading corridor. The Logistics Performance Index scores 3.3 in 2022, with a ranking around 13, illustrating high-quality trade and transport infrastructure that supports efficient cross-border activity and canal operations. Internet usage at 78% of the population in 2023 indicates broad digital connectivity conducive to e-commerce, services, and remote work. Investment in research and development remains modest at 0.158% of GDP (2023), signaling limited domestic innovation capacity and a potential constraint on productivity growth unless targeted programs expand R&D funding, collaboration, and IP development. High-technology exports reach about 1.34 million current US$ (2023), showing a foothold in advanced sectors, though the absolute scale suggests room to scale up technology-driven production. Patent activity by residents—35 applications in 2021—also points to a nascent intellectual property ecosystem requiring policy support to translate ideas into competitive products and services. The health-financing indicators—current health expenditure 8.47% of GDP (2022) and domestic health expenditure per capita, PPP of $1,873 (2022)—reflect deliberate public investment in health infrastructure, while the physician density of 1.73 per 1,000 people (2021) suggests the need for strategic workforce expansion in medical services. Overall, Panama’s infrastructure and technology profile combines strong logistics, digital reach, and a growing but still developing innovation ecosystem that can accelerate growth if complemented by increased R&D funding, IP policies, and workforce development.

Environment and Sustainability

Environmental sustainability in Panama shows progress alongside preservation challenges. Renewable energy accounts for 28% of total final energy consumption in 2021, signaling an ongoing shift toward cleaner energy sources, though further expansion would help reduce emissions and diversify the energy mix. Total greenhouse gas emissions per capita, excluding LULUCF, are 4.77 t CO2e in 2023, reflecting moderate emissions intensity likely tied to urban energy use and transport within a service-dominated economy. Water stress is indicated by freshwater withdrawal as a share of available resources at 0.901 in 2021, signaling substantial pressure on water resources and the importance of integrated water management, infrastructure resilience, and climate adaptation, especially given Panama’s urban concentrations and canal-related water needs. Social dimensions intersect with environmental ones: the prevalence of undernourishment is 5.6% (2022), and national poverty stands at 21.8% (2021), suggesting that environmental policy should be aligned with social protection to ensure that energy and water transitions are inclusive. Taken together, Panama faces the dual task of expanding renewable energy and water security while advancing social inclusion and maintaining the ecological foundations that support its canal and trade-centric economy.