Economic stability
Panama as a strategic and key hub of the global economy
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Strategic geographical position and economic diversity of Panama
Located at the crossroads of the world, Panama has capitalized on its unique location. It’s known not only for its canal but also for its thriving logistics and port sector. The creation of the International Banking Center in 1970 marked the emergence of a flourishing financial sector that continues to attract banks and investors, contributing to GDP growth. Panama hasn’t put all its eggs in one basket. Beyond the canal and free zones, the country has diversified its economy, developing sectors like tourism, finance, real estate, agriculture, and services. This diversification has reinforced its resilience to global economic turbulence.
Impact of Panama's relationship with the United States
Panama’s economic history is also marked by its close ties with the United States. The military dictatorship of Omar Torrijos Herrera in 1968, nationalist reforms, and the Torrijos-Carter Treaty of 1977 were key in shaping Panama’s economic identity. Adopting the US dollar as the official currency has ensured monetary stability and simplified international transactions. The end of the US military presence in 1999 and the return of full control of the canal marked a turning point in Panama’s history. This step led to enhanced independence and unprecedented economic modernization.
A model of success in Latin America
Today, Panama stands out as a beacon of economic success in Latin America. Its impressive over 10% GDP growth in 2022 is a testament to its vitality. Despite challenges posed by the Covid-19 crisis, Panama continues to be a prime destination for entrepreneurs and investors worldwide.
In summary, Panama has established itself as a major player in the global economy. Its stability, diversification, special relationship with the United States, and strategic position make it a unique hub for trade, investment, and innovation. Panama is more than a country with a famous canal; it’s an attractive business destination and an economic success story for every entrepreneur to consider.
International agreements between Panama and its key trading partners
Canada
The Free Trade Agreement between Canada and Panama, effective April 1, 2013, aims to facilitate trade and investment between the two countries. It eliminates tariffs on nearly 90% of Canadian exports to Panama from the onset. The treaty also includes provisions on services, investment, and intellectual property, creating a more predictable and transparent business environment.
United States
The Panama-United States Trade Promotion Agreement, signed in 2007 and effective October 31, 2012, aims to promote economic growth and strengthen economic ties between the two countries. The agreement eliminates tariffs on industrial and consumer products and protects intellectual property rights. It also contains important provisions on labor, environment, and dispute resolution, reflecting both countries’ commitment to sustainable and responsible development.
European Union
The Association Agreement between the European Union and Central America, including Panama, came into effect for Panama on August 1, 2013. This agreement creates a free trade area between the parties, progressively eliminating tariffs on many products. It includes chapters on services, investment, competition, and intellectual property protection. The agreement aims to strengthen political and economic relations between the EU and Central American countries, supporting economic development, democracy, and human rights. These agreements illustrate Panama’s commitment to international trade and economic integration, positioning it as a key trading partner and gateway to other markets in Latin America.
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