|Capital||City of Panama|
|State system||presidential republic|
|Head of State||Laurentino Cortizo|
|Head of government||Laurentino Cortizo|
|Currency name||Panamanian Balboa (PAB); US dollar (USD)|
|Time shift||-6 hours (in summer -7 hours)|
|Nominal GDP (billion USD)||60.3|
|Economic growth (%)||11.0|
Panama seceded from Colombia in 1903, with the small republic’s independence greatly aided by the US, which had a strategic interest in building and controlling the Panama Canal. To this day, the above-standard relations with the USA constitute the main determinant of the country’s independent existence and functioning. Panama is a presidential republic, where the president represents the country externally and is also the head of the executive. Legislative power is vested in the unicameral National Assembly.
Because of the Panama Canal, a strategic transportation artery connecting the Caribbean and the Pacific, Panama occupies a unique position in the world economy and geopolitics. Thanks to its role as a logistics hub, a wide range of maritime transport services, as well as financial, commercial and real estate services, are concentrated in Panama. A prominent role in the economy is played by the Zona Libre de Colón – the largest free trade zone of the American continent and the second largest in the world. Despite its relatively small population (4.17 million), Panama’s economy is the second largest in Central America and has one of the highest GDP per capita in the wider Latin American region.
Panama has been Latin America’s fastest growing economy for the past two decades. However, due to its unique position in international trade, it has been hit disproportionately hard by the economic downturn caused by the COVID pandemic. With a year-on-year drop of 17.9% of GDP, it is the third most affected economy in Latin America. The country’s economic recovery (11% growth forecast in 2021) will depend on the recovery of international trade. The development of the American economy, with which Panama’s is closely linked thanks to the bilateral free trade agreement and through the US dollar, which functions as a parallel currency in the country, will also play a big role.
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Basic information about the territory
- System of governance and political tendencies in the country
- Foreign policy of the country
The system of governance and political tendencies in the country
The official name of the country is the Republic of Panama. It is a presidential republic, where the president represents the country externally and is also the head of the executive. He is elected for a term of 5 years through direct election. Legislative power is vested in the unicameral National Assembly, which has 71 members. Check diseaseslearning to learn more about Panama political system.
The unsatisfactory handling of the coronavirus crisis cost the popularity of President Laurentino Cortiz of the center-left Partido Revolucionario Democrático. The president is trying to strengthen his position through a post-pandemic economic recovery. To this end, he launched an ambitious program of public works, investment in hospital facilities, construction of Line 3 of the Panama Metro, and highway improvements. However, the country is most likely not at risk of political instability, as the ruling coalition has a legislative majority and the next elections are scheduled for May 2024.
Foreign policy of the country
A constant in Panama’s foreign policy is the above-standard relationship with the US, which remains the country’s largest trading partner. Recently, cooperation has also been strengthened in the field of combating drug trafficking. On the other hand, the reality of increasing trade flows will force Panama to carefully develop relations with China as well. A possible escalation of trade tensions between China and the US could put the country in an awkward position between two millstones. Check themotorcyclers for Panama defense and foreign policy.
Panama is a member of the so-called Lima Group of countries, which are actively advocating for the restoration of democracy in Venezuela. As for Panama’s entry into the Pacific Alliance, the political decision on the intention to become a member has already been made, however, Panama is close to concluding a free trade agreement with Colombia, while cooperation between the two countries in the trade and fiscal fields has long-term problems.
Relations with the EU have long been marred by Panama’s disappointing progress in relation to tax evasion and money laundering. In February 2020, the EU added Panama to the blacklist of countries that are considered non-cooperative tax jurisdictions (so-called tax havens).
The most represented group in the country are whites and mestizos with 70%, followed by blacks and mulattoes with 15%, the population of Asian origin has a 9% share and finally the indigenous Indian population makes up 6% of the population. The ethnic origin of the Panamanian population is one of the most diverse in the world – from the peoples of Latin America, through Europeans and Americans to Chinese and Indians. The population experienced a rocket increase in the second half of the 20th century. At the moment, the birth rate is relatively stable and the moderate growth is due to immigration from neighboring countries. The dominant religion is traditionally Catholicism, however, due to the varied ethnic composition, almost every conceivable world faith is present in the country.