Panama Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in panama, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals
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Investment Climate Statement
Last published date:

The U.S. Department of State’s Investment Climate Statements help U.S. companies make informed business decisions by providing up-to-date information on the investment climates of more than 170 countries and economies. They are prepared by our embassies and consulates around the world and analyze each economy’s openness to foreign investment. Topics include:

•    Openness to, and Restrictions upon, Foreign Investment, 
•    Investment and Taxation Treaties,
•    Legal Regime,
•    Industrial Policies,
•    Protection of Property Rights,
•    Financial Sector,
•    State-owned Enterprises,
•    Corruption,
•    Labor Policies and Practices,
•    Political and Security Environment, and
•    U.S. International Development Finance Corporation (DFC) and Other Investment Insurance or Development Finance Programs

Each statement provides a starting point for U.S. firms and offers a point of contact at the relevant U.S. embassy or consulate abroad.

These reports are also a resource for foreign governments to create business environments that ensure fair treatment for the United States and our companies and investors. 

To access the full Investment Climate Statement, visit the U.S. Department of State Investment Climate Statements website.

EXECUTIVE SUMMARY - Panama

Panama’s investment climate is generally favorable, underpinned by structural advantages such as its strategic geographic position and region-leading economic growth. It continues to face uncertainties posed by:

  • fiscal strain,
  • domestic political dynamics, and
  • intermittent social unrest continues to pose uncertainties.
     

President Jose Raul Mulino, in office since July 2024, pledged to stabilize public finances and attract investment. However, his well-intentioned reform agenda, which enhanced the long-term sustainability of the country’s social security system, according to a June 24 Bank of America analysis, triggered protests and strikes. Fiscal pressures, the March 2024 downgrade of Panama’s credit rating to below investment grade by Fitch Ratings, and political fragmentation in the country’s legislature present a challenging environment for both President Mulino’s domestic governance agenda and foreign investment. Despite these challenges, Panama’s economy generally outpaces the region and retains key structural advantages such as:

  • dollarization,
  • a strategic location,
  • the Panama Canal,
    strong logistics and services sectors, and
    significant U.S. commercial presence, with over 100 U.S. firms.
     

Panama attracts an average of $2 billion to $4 billion in foreign direct investment (FDI) annually and hosts the world’s second largest free trade zone. At the end of 2023, U.S. direct investment in Panama totaled $4.5 billion, according to the U.S. Bureau of Economic Analysis. Yet several factors hinder FDI and complicate existing investments, including:

  • corruption,
  • insufficient transparency and judicial capacity,
  • non-payment issues, and
    an undereducated workforce.
     

Panama improved anti-money laundering efforts, leading to its removal from the Financial Action Task Force Grey List in October 2023 and a June 2025 recommendation by the European Commission to remove Panama from its list of countries with strategic deficiencies in anti-money laundering and combating the financing of terrorism.

Panama’s economy grew by 2.9 percent in 2024, a decline from 7.4 percent in 2023 and 10.8 percent growth in 2022, according to Panama’s National Institute of Statistics and Census (INEC). However, early estimates from the IMF’s June 2025 Economic Report show a positive growth trajectory in 2025, identifying Panama as one of the strongest economic performers in the Latin America and Caribbean region, with a projected 4.1 percent growth for 2025 to 2027, exceeding the regional average of 2.5 percent. The Panamanian government is eager to attract FDI and has several policies in place to encourage multinational companies to establish regional offices in Panama such as the Multinational Manufacturing Services Law and the Multinational Headquarters Law. The sectors accounting for the largest portions of Panama’s GDP in 2024, according to INEC, were:

  • real estate and business (25%),
  • trade (24%), and
  • transportation and logistics (19%).

 

The fiscal deficit widened to a record 7.4 percent of GDP in 2024, higher than the 4.0 percent target legally mandated in Panama’s Law of Fiscal Social Responsibility. Panama’s debt reached $56.3 billion in April 2025, nearly 70 percent of 2024 GDP. Two of the three major credit rating agencies rate Panama’s sovereign debt at investment grade as of June 9, 2025, with Moody’s at Baa3 and Standard & Poor’s at BBB- (the lowest levels within investment grade). Fitch downgraded Panama’s credit rating to BB+ (speculative, also known as non-investment grade or “junk”) on March 28, 2024, noting the downgrade reflected fiscal and governance challenges aggravated by the closure of the Cobre Panamá copper mine, operated by First Quantum Minerals’ subsidiary Minera Panamá.

Panama suffers from unemployment and high levels of labor informality and income inequality. Unemployment was 9.4 percent in 2024, up from 7.4 percent in 2023. In 2024, 49 percent of the workforce was employed in the informal sector, with indigenous communities experiencing labor informality rates above 70 percent. Panama is also one of the most unequal countries globally and in Latin America in terms of income distribution, with the 13th highest Gini Coefficient and a national poverty rate of 13 percent according to the World Bank.

Social unrest and protest activity have disrupted supply chains, particularly in October-November 2023 and July 2022. Protests occurred in April 2025 to protest several items, principally:

  • reforms to the social security system (Caja de Seguro Social),
  • the potential reopening of Cobre Panamá,
  • plans to construct a new Panama Canal reservoir, and
  • a U.S.-Panama security memorandum of understanding.
     

These protests led to clashes with authorities and multiple arrests. The protests coincided with a significant drop in President Mulino’s approval rating.

See the U.S. Department of State Investment Climate Statement for Panama.   

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