Updated May 17, 2023
Panama: An Overview
Panama’s central location in the Americas (linking North
under existing anti-corruption authorities due to Martinelli’s
and South America), large financial sector, use of the U.S.
involvement in corruption in Panama.
dollar as currency, and transportation infrastructure—
especially the Panama Canal, which connects the Atlantic
Panama at a Glance
and Pacific Oceans—make the country a global trade hub.
Within Central America, it is arguably the closest strategic
Population: 4.45 mil ion (2022, IMF est.)
partner of the United States.
Area: 29,120 square miles, slightly smaller than South
Figure 1. Map of Panama
Carolina (CIA World Factbook)
GDP: $71.1 bil ion (2022, current prices, IMF est.)
Real GDP Growth (% change, constant prices, IMF):
-17.9% in 2020; 15.3% in 2021; 7.5% in 2022 (2023 est.), 4.0%
in 2023 (projected)
Per Capita GDP: $16,173 (2022, current prices, IMF est.)
Key Trading Partners: United States (20.1%), China
(15.0%), Japan (4.2%), Mexico (3.7%), and Costa Rica (2.5%)
(2022, total merchandise trade, TDM)
Sources: Central Intelligence Agency (CIA) World Factbook,
International Monetary Fund (IMF), Panama National Institute
of Statistics, as presented by Trade Data Monitor (TDM).

In July 2019, President Cortizo introduced a legislative
Source: CRS.
package of constitutional and public sector reforms
Political and Economic Environment
intended to reduce corruption and improve public services.
The reforms were largely sidetracked by the onset of the
Panama holds regular free and fair democratic elections and
Coronavirus Disease 2019 (COVID-19) pandemic in 2020
generally respects civil liberties and political rights,
and stalled after a series of nationwide labor-related strikes
although corruption remains a challenge. Current President
and protests weakened public support for Cortizo and the
Laurentino “Nito” Cortizo of the center-left Democratic
PRD. In June 2022, Cortizo announced he had been
Revolutionary Party (PRD) won a narrow victory in May
diagnosed with a rare blood disorder but said he planned to
2019 elections, receiving 33% of the vote in a seven-
serve through the end of his term in July 2024. Should the
candidate contest. Cortizo’s PRD also won 35 seats in
president be unable to complete his term, under Panama’s
Panama’s 71-seat National Assembly; it is working in
constitution, current Vice President José Gabriel Carrizo of
coalition with the National Republican Liberal Movement
the PRD would assume presidential duties. The next
(Molirena), which has five seats in the assembly, providing
national elections, both legislative and presidential, are
the government with a legislative majority. Cortizo heads
scheduled for May 2024.
Panama’s seventh civilian government since the December
1989 U.S. military intervention that ousted the military
Panama experienced severe public health and economic
regime of General Manuel Antonio Noriega.
impacts as a result of the pandemic. As of March 2023
(latest data available), Panama reported around 1 million
Cortizo succeeded Juan Carlos Varela (2014-2019) of the
confirmed COVID-19 cases and 8,609 deaths, a mortality
center-right Panameñista Party. Varela served as vice
rate of 199 deaths per 100,000 people—the highest in
president and foreign minister during the Ricardo Martinelli
Central America. Panama’s services-based economy, which
administration (2009-2014). The Varela administration
averaged almost 6.2% growth annually from 2010 to 2019,
pursued numerous corruption cases against Martinelli
according to International Monetary Fund (IMF) statistics,
government officials, including Martinelli himself, who was
was especially vulnerable to the pandemic-induced global
investigated over irregularities in a public welfare program
economic contraction in 2020. The sharp slowdown in
and illegal wiretapping and pardons. The United States
international commerce and shipping caused Panama’s
extradited Martinelli to Panama in 2018; he was acquitted
economy to contract by 17.9% that year. Growth returned
twice on illegal wiretapping charges, most recently in
in 2021, with GDP expanding by 15.3%, and the trend
November 2021. In July 2022, Martinelli declared he would
continued with an estimated 7.5% expansion in 2022.
run for president in 2024. In January 2023, the U.S.
Increased copper mining revenues, a recovery in private
Department of State designated Martinelli and his
investment, and strong activity related to the Panama Canal
immediate family ineligible for entry into the United States
are contributing to the recovery. Tightening financial
conditions since 2022 have dampened expectations for
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link to page 1 Panama: An Overview
GDP growth in 2023 to a projected 4%, according to the
migrants, including families with children, may travel
IMF.
through the Darién in 2023.
U.S.-Panama Relations
Panama has worked closely with the United States and
other countries in the region to advance cooperation on
Close U.S.-Panamanian relations stem in part from the
migration. Panama is a signatory of the 2022 Los Angeles
extensive linkages developed when the Panama Canal was
Declaration on Migration and Protection, and it hosts some
under U.S. control (1914-1999) and Panama hosted major
145,000 resident Venezuelans, according to the
U.S. military installations. A bilateral free-trade agreement
International Organization for Migration. In April 2023,
(FTA) that entered into force in 2012 has significantly
Panama, Colombia, and the United States announced a two-
liberalized bilateral trade. Because Panama has a services-
month coordinated campaign to combat migrant smuggling
based economy, it runs a large merchandise trade deficit
through the Darién and longer-term efforts to deter irregular
with the United States. In 2022, the United States exported
migration through the region.
$12.0 billion in goods to Panama and imported $523
Drug Trafficking and Money Laundering. According to
million in goods, according to the U.S. Department of
the State Department’s 2022 International Narcotics
Commerce; U.S. services exports to Panama in 2021 (most
Control Strategy Report (INCSR), transnational drug
recent year available) amounted to $2.3 billion, and services
trafficking organizations use Panama as a transit country to
imports amounted to $1.3 billion. The stock of U.S. foreign
smuggle cocaine to the United States and other markets,
direct investment in Panama stood at $3.5 billion in 2021, a
with up to 30% of cocaine produced in Colombia passing
decrease of 11% from 2020. The bulk of U.S. investment in
through Panama. Nevertheless, according to the INCSR,
Panama is held in nonbank holding companies at $3.1
Panama is among the region’s most capable partners in
billion, followed by wholesale trade at $736 million and
countering illicit narcotics. Panama has improved its
mining at $123 million.
compliance with international standards for anti-money
Under the Biden Administration, high-level engagement
laundering measures, but, according to the INCSR,
with Panama is continuing. Secretary of State Antony
deficiencies exist in information sharing, risk management,
Blinken and Secretary of Homeland Security Alejandro
prosecutions of white-collar criminals, and implementation
Mayorkas visited in April 2022 to discuss migration.
of a 2020 beneficial ownership law.
President Cortizo participated in the White House’s virtual
Concerns About China. Panama established diplomatic
Summits for Democracy in December 2021 and March
relations with the People’s Republic of China (PRC)—and
2023 and in the June 2022 Summit of the Americas held in
cut ties with Taiwan—in 2017. In November 2017, Panama
Los Angeles. In July 2022, Panama signed a memorandum
became the first country in Latin America to join China’s
of understanding with the United States (after joining Costa
Belt and Road Initiative (BRI), which aims to develop
Rica and the Dominican Republic in the Alliance for
PRC-controlled global infrastructure, transportation, trade,
Development in Democracy) to strengthen supply chain
and production networks. Then-President Varela touted
resiliency.
Panama’s participation in the BRI as an opportunity to
Migration. Large-scale northward migration through the
improve Panama’s infrastructure and its connectivity to
treacherous Darién Gap region of Panama bordering
Asia. These projects have raised concerns among U.S.
Colombia has become a humanitarian and security concern
military leaders that the heavy operational presence of
for Panama and the region (see Figure 1). Migrants in the
PRC-linked companies along the Panama Canal may
Darién face widespread criminality—including sexual
present a security vulnerability for the United States. The
violence—and a high risk of disease and injuries. Large
Varela administration also signed some 30 cooperation
concentrations of migrants also imperil Indigenous
agreements with China and began FTA negotiations. Since
communities in the Darién, which are unprepared to receive
then, the Cortizo administration has canceled several
them, and in other ecologically fragile areas.
planned Chinese projects, citing their lack of feasibility and
the failure of some PRC-linked firms to fulfill obligations,
Many migrants pay smugglers to guide them through the
and has suspended the FTA talks. China remains Panama’s
most difficult parts of the land route and to enter Central
second-largest trading partner.
America by boat across the Gulf of Urabá on the Caribbean
Sea. Panama cooperates with neighboring Colombia and
U.S. Assistance. The United States allocated $12.5 million
Costa Rica to regulate the flow of migrants through its
in bilateral aid to Panama in FY2022, including $11.3
borders and prosecute smugglers. However, the scale of
million in global health funding to build on Panama’s
migration in recent years has challenged Panama’s border
COVID-19 response; $500,000 for nonproliferation, anti-
patrol, which must devote substantial resources to
terrorism, demining, and related programs (NADR); and
registration and biometric screening of migrants and to
$725,000 for International Military Education and Training
rescuing those in distress. Panama estimates that over
(IMET). For FY2024, the Biden Administration requested
250,000 migrants passed through the Darién in 2022, nearly
$1.2 million for aid administered by the State Department
twice the 2021 number. The majority of migrant encounters
and the U.S. Agency for International Development, in
in 2022 were of Venezuelans, estimated at 150,327;
addition to support for regional and global programs
followed by Ecuadorians (29,356); Haitians (22,435);
administered by those and other agencies.
Cubans (5,961); and other nationalities. According to
This In Focus updates an earlier version written by former
Panama’s National Migration Service, 127,678 migrants
CRS Specialist Mark P. Sullivan.
entered Panama through the Darién during the first four
months of 2023—a sixfold increase over the same period in
June S. Beittel, Analyst in Latin American Affairs
2022. The United Nations predicts that up to 400,000
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Panama: An Overview

IF10430
Ramon Miro, Analyst in Latin American Affairs


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https://crsreports.congress.gov | IF10430 · VERSION 19 · UPDATED

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