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Panama's economy is based primarily on a well-developed services sector that accounts for nearly 80% of GDP. Services include the Panama Canal, banking, the Colon Free Zone, insurance, container ports, flagship registry, medical and health, and other business.
A major challenge facing the government under former President Mireya Moscoso was turning to productive use the 70,000 acres of former U.S. military land and the more than 5,000 buildings that reverted to Panama at the end of 1999. The Government of Panama is also seriously considering undertaking a major $6-8 billion expansion of the Panama Canal, but a national referendum, required by Panamaís Constitution, has not yet been scheduled. GDP growth for 2004 was 6.2%, compared to 4.3% in 2003. Though Panama has the highest GDP per capita in Central America, about 40% of its population lives in poverty. Panama has bilateral free trade agreements with El Salvador, Taiwan, and Singapore. Panama is exploring free trade negotiations with Mexico and other Latin American countries. Panama is negotiating bilateral free trade agreements with the United States and Chile. From March 2001 to February 2003, Panama served as host for the Free Trade Area of the Americas negotiations. |
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