Panama: An Overview




Updated March 6, 2024
Panama: An Overview
Panama’s central location in the Americas (linking North
according to the International Monetary Fund (IMF).
and South America), large financial sector, use of the U.S.
Growth returned in 2021, with gross domestic product
dollar as currency, and transportation infrastructure—
(GDP) expanding by 15.8%, and continued in 2022 with an
especially the Panama Canal, which connects the Atlantic
estimated expansion of 10.8%. GDP growth slowed to an
and Pacific Oceans—make the country a global trade hub.
estimated 6.0% in 2023, and the IMF projects GDP growth
Given its strategic importance to U.S. commerce and
of approximately 4.0% in 2024.
security, some Members of Congress have demonstrated
interest in strengthening the U.S. partnership with Panama.
Panama at a Glance
Figure 1. Map of Panama
Population: 4.45 mil ion (2022, IMF est.)
Area: 29,120 square miles, slightly smaller than South
Carolina (CIA World Factbook)
Gross Domestic Product (GDP): $87.24 bil ion (2024,
current prices, projected, IMF)
Per Capita GDP: $19,350 (2024, current prices, projected,
IMF)
Key Trading Partners: United States (20.1%), China
(15.0%), Japan (4.3%), 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).
Source: CRS.

Political and Economic Environment
Panama’s next elections are scheduled for May 5, 2024.
Until February, polls had suggested that former President
Panama reestablished representative democracy in 1989,
Ricardo Martinelli (2009-2014) was the front-runner for the
following a U.S. military intervention that ousted the
presidential election in a crowded field of candidates,
military regime of General Manuel Antonio Noriega. Since
despite a prison sentence that constitutionally bars him from
then, Panama has held regular free and fair elections and
running for president. In February 2024, the Supreme Court
generally has respected civil liberties and political rights,
although corruption has remained a challenge.
of Panama upheld a July 2023 money-laundering
conviction sentencing Martinelli to more than 10 years in
Current President Laurentino “Nito” Cortizo of the center-
prison. Panama’s electoral court formally annulled
left Democratic Revolutionary Party (PRD) was
Martinelli’s candidacy on March 4, 2024. Martinelli was
inaugurated to a five-year term in July 2019 after narrowly
granted political asylum by Nicaraguan President Daniel
winning the May 2019 presidential elections with 33% of
Ortega and has been residing in the Nicaraguan Embassy in
the vote in a seven-candidate contest. Cortizo’s PRD also
Panama since February.
won 35 seats in Panama’s 71-seat unicameral National
According to a poll conducted in mid-February, José Raúl
Assembly; it entered into a coalition with the National
Mulino—initially Martinelli’s running mate from the
Republican Liberal Movement, which has five seats,
Realizing Goals party—led the race with a 19.8% support.
providing the government with a legislative majority.
Rómulo Roux, the Democratic Change candidate and
Cortizo has faced a series of political and economic
Martinelli’s former Minister of Panama Canal Affairs,
setbacks over the course of his term, contributing to an 88%
followed closely behind with 19.6% of the vote. Incumbent
disapproval rating in February 2024, according to one poll.
Vice President José Gabriel Carrizo was next with 15.7%
In July 2019, he introduced a package of constitutional and
support, followed by former President Martín Torrijos
public sector reforms to reduce corruption and improve
(2004-2009), who had 11.8% support.
public services. The reforms were largely sidetracked by
the COVID-19 pandemic in 2020 and stalled after a series
U.S.-Panama Relations
of nationwide labor strikes and protests weakened support
Close U.S.-Panamanian relations stem in part from the
for Cortizo and the PRD.
extensive linkages developed when the Panama Canal was
The pandemic also took a toll on Panama’s services-based
under U.S. control (1914-1999) and Panama hosted major
economy, which averaged almost 6.2% growth annually
U.S. military installations. Some Members of the 118th
from 2010 to 2019 but contracted by 17.9% in 2020 due to
Congress have sought to strengthen the partnership by
the slowdown in international commerce and shipping,
increasing cooperation on commercial, migration, and
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link to page 1 Panama: An Overview
security matters. S.Res. 357, for example, would call on the
Drug Trafficking and Money Laundering
President to engage with Panama and other members of the
According to the U.S. State Department’s 2023
Alliance for Development in Democracy (ADD; Costa
International Narcotics Control Strategy Report (INCSR),
Rica, Dominican Republic, and Ecuador) to advance shared
Panama’s location makes it a major transit country for
priorities and U.S. economic and security interests.
cocaine smuggling by transnational criminal organizations;
Trade and Investment
up to 40% of cocaine produced in Colombia reportedly
passes through Panama. Nevertheless, according to the
A bilateral free trade agreement (FTA) that entered into
INCSR, Panama is among the U.S. government’s most
force in 2012 (P.L. 112-43) has significantly liberalized
capable partners in the region in countering illicit narcotics.
trade. Because Panama has a primarily services-based
The United States and Panama also collaborate on efforts to
economy, it runs a large merchandise trade deficit with the
combat financial crimes, including through a bilateral Anti-
United States. In 2023, the United States exported $11.2
Money Laundering and Anti-Corruption Task Force,
billion in goods to Panama and imported $527 million in
operating since May 2021.
goods, according to the U.S. Census Bureau. U.S. services
exports to Panama in 2022 amounted to $2.6 billion, and
Panama Canal Concerns
services imports amounted to $2.4 billion. The stock of
The Panama Canal is responsible for more than 6% of
U.S. foreign direct investment in Panama stood at $3.8
Panama’s GDP, with more than 14,000 vessel transits in
billion in 2022, an increase of 5% from 2021.
2023. In recent months, the rise in temperatures in the
Over the past two years, the United States and Panama have
Pacific Ocean, linked to the El Niño climate phenomenon,
collaborated on efforts to strengthen supply chains. This has
has resulted in severe drought conditions in Panama.
included multilateral cooperation under the Americas
Record low water levels have resulted in the first ever
Partnership for Economic Prosperity, a regional integration
restrictions to the number of daily transits through the
initiative, and the U.S.-ADD Consultative Dialogue on
canal, capping crossings at 24 vessels daily. Prior to the
Supply Chains and Economic Growth. In July 2023, the
restrictions, there were an average of 36 daily canal
Biden Administration announced a bilateral partnership
crossings. The 33% decrease in daily transits could disrupt
with Panama to explore opportunities to strengthen the
supply chains, push up transport and consumer costs, and
global semiconductor supply chain under the CHIPS Act of
increase sailing times due to cargo diversions. Some 72% of
2022 (H.R. 4346). The report accompanying the House-
transits through the canal are either toward or away from
passed Department of State, Foreign Operations, and
U.S. ports, according to the U.S. State Department.
Related Programs (SFOPS) Appropriations Act, 2024
In November 2017, Panama became the first country in
(H.Rept. 118-146 to H.R. 4665), would encourage the U.S.
Latin America to join the People’s Republic of China’s
International Development Finance Corporation to
(PRC’s) Belt and Road Initiative, which aims to develop
prioritize infrastructure and port projects to develop secure
China-centered global infrastructure, transportation, trade,
supply chains in Panama and other ADD members.
and production networks. Some U.S. military leaders have
Migration
expressed concerns that the presence of PRC-linked
companies along the Panama Canal may present a security
Large-scale northward migration through the Darién Gap
vulnerability for the United States. H.Rept. 118-146 would
region of the Panama-Colombia border has become a
echo those concerns, and the report accompanying the
humanitarian and security concern for Panama and the
Senate-reported SFOPS bill for FY2024 (S.Rept. 118-71 to
broader region (see Figure 1). Migrants in the Darién face
S. 2438) would direct the Secretary of State to report to the
high risks of crime, disease, and injuries. Panama
Appropriations Committees on PRC influence in Panama.
cooperates with neighboring Colombia and Costa Rica to
regulate the flow of migrants through its borders and
U.S. Assistance
prosecute smugglers.
The United States allocated $12.5 million in bilateral aid to
Nevertheless, the scale of migration in recent years has
Panama in FY2022, including $11.3 million in global health
challenged Panama’s border patrol, which devotes
funding; $500,000 for Nonproliferation, Anti-terrorism,
substantial resources to registration and biometric screening
Demining, and Related programs; and $725,000 for
of migrants and rescuing those in distress. Panama
International Military Education and Training. For FY2024,
estimates that more than 520,000 migrants entered through
the Biden Administration requested $1.2 million of bilateral
the Darién in 2023, with about 30% of migrants passing
aid for Panama. Neither FY2024 SFOPS bill would
through in August and September. More than 60% of those
designate an overall funding level for Panama, but H.Rept.
who crossed into Panama were from Venezuela.
118-146 would stipulate $2 million in Foreign Military
Panama also cooperates closely with the United States on
Financing for the country.
migration matters, including to detect and detain potential
This In Focus updates an earlier version written by former
security threats. H.Rept. 118-146 would direct the Secretary
CRS Specialist June S. Beittel and former CRS Analyst
of State to submit a report on opportunities to support
Ramon Miro.
Panama in its management of migrant flows.
Leticia Chacon, Analyst in Foreign Affairs
IF10430


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Panama: An Overview


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