Traditionally Panama´s economy has been based on the service industry partly as a spin-off from the Canal and the ship registry. Panama´s fleet is the largest in the world with twice as many ships as our nearest rival. Legal services, banking, insurance are key factors.
The Colon Free Zone and the ports are also major elements of the economy.
Recently the economy has taken a major leap forward. Interest in Panama from abroad launched a real estate and construction boom and major investments in many fields, including energy, tourism and telecomunications.The $5.2 billion enlargement of the Panama Canal, including a third set of locks to accommodate post Panamax ship too wide for the present locks, has boosted the economy into greater acceleration and the outlook is for continued growth.
Panama´s economy, measured through the Monthly Index of Economy Activity (IMAE), was growing at a rate of 10.21% in the early months of 2008 it was reported by the Comptroller´s Office. Despite economic problems in the United State and the global financial crisis, the growth rate of the Panamanian IMAE has not slowed down yet.
The former president of the Inter-American Development Bank and the highest-ranking representative of the Ibero-American General Secretariat, Enrique Iglesias, spotlighted Panama as one of the countries that will meet the target of the Millennium Development Goals in 2015. According to Iglesias statistics show that poverty has fallen as a result of economic growth.
As to construction. Hundreds of residential projects are underway throughout the country.
Panama is also experiencing high demand for immigration, both from retirees and others, mostly from North America and Europe and from neighboring countries, notably Colombia and Venezuela.
Panama´s greatest asset, perhaps equal to the Canal, is the fact that the American dollar is in practice the currency of the country. Officially Panama´s currency is the Balboa which exists in coinage form only, identical in size to U.S. coinage. But Panama doesn´t print Balboa bills. The country uses American paper currency, and therefore the Balboa is automatically at par with the U.S. dollar. This situation derives from the unique association between the U.S.A. and Panama as a consequence of the Canal.