Panama has enjoyed two golden eras of economic expansion in the past 500 years. Investors who got in early then were rewarded with wealth beyond imagining. Today, Panama’s third golden age is just beginning. Those who prepare for this new commercial dawn can expect to realize riches comparable to the conquistadors of old. The tourism in Panama is the key to this third golden economic age.
Panama’s First Economic Golden Age
The time of the conquistadors was a brutal chapter in the history of Panama. Native populations died from war and disease while the colonists extracted unimaginable riches.
Over 30 sunken Spanish treasure ships have been identified in the area around Panama’s coastal waters. Many more wrecks undoubtably remain undiscovered. Those that sank in Panama’s waters represent only a small fraction of the total treasure taken from the region.
To give you an idea of the value of this treasure, just two such wrecks in the region were excavated by Mel Fisher in the 1980s and yielded treasure worth over a billion dollars in today’s terms.
So much potential wealth was evident in the area, that Spanish explorer Vasco Nuñez de Balboa was sent to chart the area in 1501. He discovered that the Isthmus of Panama was a narrow land bridge separating the vast Atlantic and Pacific oceans.
Balboa knew that finding a navigable channel between both oceans would revolutionize global shipping.
It was then, over 500 years ago, that the first idea for a canal to connect the two oceans was formed.
In order to tap the unimaginable wealth harvestable from a fast route from the Atlantic to the Pacific, Pope Charles V ordered a canal built. This was a time when the local populations suffered immeasurably, and the colonialists took everything they could.
Second Economic Golden Age: The Canal And Financial Services
Despite the orders of Pope Charles V, the canal took over 350 years to be completed.
In 1881, a French company began an ill-fated plan to build a canal across the Isthmus of Panama. This monumental task failed, and it fell upon later investment companies to finish the canal.
However, when the canal was finished it opened the economic floodgates for Panama.
Suddenly, Panama controlled the choke point of global trade. This inevitably brought a second round of colonial occupation, this time from the United States.
Once again, this new economic opportunity was detrimental to the local populace. During the canal’s construction over 25,000 workers perished.
While banking and trade financing had long been at home in Panama, the dawn of the era of Panama as an offshore tax haven began over a century ago.
In 1904, Theodore Roosevelt appointed J.P. Morgan & Co. as the fiscal agent for Panama, in an attempt to get control of the canal. Panama became a tax haven in 1919 when it started registering ships belonging to Standard Oil for lower fees than the United States. With the revenues from the canal, and its own status as a banking and tax haven, Panama made locals and international investors rich through international trade and finance.
Panama has been a safe and private place to incorporate offshore companies for decades, and its tax system is very sympathetic to foreign businesses.
While a lot of the wealth created stayed in the hands of foreign investors, a lot of it was invested in Panama and made its way to the Panamanian people. This is especially true since Panama took back control of the canal from the United States in 1999.
Since then, Panama has enjoyed the economic boom that Kathleen Peddicord and Lief Simon have been writing about for over 20 years.
While the rules of the offshore financial services world are tightening, and Panama is no longer the absolute tax haven that it once was, Panama continues to create huge wealth from shipping and offshore services.
Now that these industries have matured, Panama is turning to cleaner, more inclusive new industries to shepherd it through the new millennium.
With her shipping infrastructure, Caribbean and Pacific beaches, and lush jungles, Panama is creating a new cash cow industry to diversify its economy from the financial services and the canal.
Panama’s Third Economic Golden Age: Tourism
Tourism in Panama is an untapped market. Tourism currently only generates 2.9% of Panama’s GDP. However, Panama has just announced a massive investment in its tourism industry.
This time Panamanians will fully benefit from the economic boom.
This industry won’t be destructive of the local population or extractive of the resources of the country.
President Laurentino “Nito” Cortizo is taking tourism seriously. He even upskilled the workforce during the pandemic lockdowns by providing free tourism training courses.
He appointed Panama’s first full Minister of Tourism and created a tourism marketing entity called PROMTUR to promote and expand the industry. More importantly, Cortizo funded it with a five-year budget of over US$300 million.
Part of the plan includes a new dual cruise ship pier and new convention center in Panama City. Previously, the only cruise ship port in Panama was two hours away from Panama City in the Colón province.
This new cruise ship facility will encourage Holland America, Norwegian, Princess, and Carnival Cruise lines to expand their offerings in Panama. The new terminal will allow Panama to become the home port for cruises. This means tourists will fly to Panama to get on their cruises, and will finish their cruises back in Panama.
This will encourage tourists to spend additional days in Panama before and after their cruises, greatly increasing the economic impact of the cruise industry in the greater Panamanian economy.
On my February 2022 scouting trip to Panama City, Lief Simon took me on a tour of the area that included the Amador Causeway. Lief has lived in Panama City for well over a decade and has studied its development closely. One of the most interesting projects he showed me was the giant convention center that is situated on the Causeway.
This new center is set to make Panama the convention capital of Central America, offering 190,000 square feet of convention space, with an additional almost 7,000 square feet of smaller rooms and banqueting halls. This facility will allow for 20,000 people per day to attend conferences, and will offer stunning views of the ocean from high-class restaurants serving lobster freshly caught in the Bocas del Toro area of Panama.
The Azuero Peninsula on the southern coast of Panama offers some of the best fishing in the world. It’s a bit of a secret at the moment, but with Panama’s international tourism marketing plan, soon everyone will know about it.
If you want the best surfing in the region, go to the Bocas Del Toro archipelago. You might be able to scoop some lobsters off the ocean floor while you are at it.
Volcano hiking and jungle tours are also exciting tourism opportunities inland in Panama. Plus, you get the opportunity to view more bird species in one small location than in all of North America.
Another reason Panama continues to show bumper growth in a time when other Central American countries are stagnating is that the government continues to pump money into major high-impact infrastructure projects.
The canal doubled in capacity when its major expansion was opened in 2016.
The government has financed the construction of a fourth bridge across the Panama Canal at a cost of US$1.5 billion, which will relieve traffic congestion and provide easier accessibility to the interior of the country. This will further enhance the additional access offered by their new US$2.5 billion investment in a metro line running under the canal.
Just as a rising tide raises all ships, anyone who makes an investment in Panamanian tourism now will benefit from these huge government investments, too.
How To Invest In The New Panamanian Tourism Boom
Panama has 68 direct flights from 31 countries, offering easy access for tourists from almost anywhere on the globe.
-Invest in short-term rentals around Panama City for convention center clients and medical tourists
While short-term tourism rentals aren’t allowed in most of Panama City to avoid tourism displacing local renters, certain developments are allowed to rent to tourists in the short term. (In Panama, a short-term rental means less than 45 days.)
By investing in a property with a short-term rental license, you can expect rental returns from the 6% to 10% mark after all expenses.
If you want to discuss your short-term rental investment options around Panama City, contact our most-trusted Panamanian property agent here.
-Invest in short-term rentals outside Panama City
With their huge investment in advertising Panama as a premium tourism destination, tourism in all areas is expected to flourish. As this happens, all short- and long-term rental opportunities will improve for all property owners.
A savvy investment now in a rental property in a popular or up-and-coming tourist area will increase cash flow and appreciation rates in-step with these major government investments.
-Invest in tourism properties
Right now, deals can still be found on guesthouses, bed-and-breakfasts, small hotels, and tourism service businesses.
-Invest in agricultural investments
With this impending tourism boom across Panama, a corresponding increase in the production of high-value food to supply resorts and restaurants needs to happen.
Given these major investments in the economy and infrastructure, it’s predicted that by 2030 Panama will have lost its designation as a developing country and will have joined the ranks of First World nations.
Editor, Overseas Property Alert
Tags: 'invest in panama''Investing In Panama'panama investmentreal estate in Panama
Tourism in Panama. Panama recorded a total of 647,000 tourists in 2020, ranking 117th in the world in absolute terms. That smaller countries regularly perform lower in a comparison of the absolute number of guests, is obvious.Where do most tourists come from in Panama? ›
Tourism in Panama represents one of Panama's main activities. The main areas of tourism in the country focus on business tourism, beaches, health and trade. Most of the tourists come from the United States, Canada, Europe, Central America, and South America.Does Panama depend on tourism? ›
As a country marked by a "dual economy," Panama shares with other Latin American countries a fast growing, modern urban sector side by side with impoverished rural and peri-urban populations. Tourism has been growing in Panama and contributes at least 6 percent of gross domestic product.Why should you visit Panama? ›
Panama is replete with vibrant and diverse marine life which makes it a great destination for snorkeling, scuba diving, fishing, and whale watching. The waters along Panama's Pacific coast that comprise the Gulf of Chiriquí are especially ideal for engaging in activities below the surface.What is the most famous thing about Panama? ›
Panama is most famous for its canal
Panama is most well-known for the Panama Canal, an engineering marvel that connects the Pacific and Atlantic oceans. It's also famous for having one of the most biodiverse rainforests in the world, as well as some of the most beautiful beaches in Central America.
Panama is the only place in the world where you can see the sun rise on the Pacific and set on the Atlantic. The canal generates fully one-third of Panama's entire economy. "A man, a plan, a canal; Panama." is a palindrome. Panama was the first Latin American country to adopt the U.S. currency as its own.Where does Panama get most of its money? ›
The economy of Panama is based mainly on the services sector, which accounts for nearly 80% of its GDP and accounts for most of its foreign income. Services include the Panama Canal, banking, commerce, the Colón Free Trade Zone, insurance, container ports, and flagship registry, medical and health and tourism.Is Panama a good country to invest in? ›
A thriving economy, a stable political environment, and rising property prices are just some of the many reasons why invest in Panama. Panama is making waves as one of the most exciting property investment locations in Latin America.Is Panama a good country? ›
Panama is considered the safest country in Central America, and it is visited often by people from all over the world. There are thousands of expats from Europe, North America, South America and Asia who reside permanently in Panama.Is Panama a rich or poor country? ›
Panama - Poverty and wealth.
|GDP per Capita (US$)||Panama|
The best time to visit Panama is between January and mid-April. This is the driest part of the year and shows off this tropical country at its most stunning. However, it's also worth considering traveling to Panama during the rest of the year, when you can experience local events and festivals.Is Panama a beautiful place? ›
With access to both the turquoise Caribbean and the azure Pacific, Panama is attractively tropical all year round. Add to that excellent beaches and phenomenal natural scenery, and it's no surprise that it's one of the most tourist-friendly destinations in Central America.Is Panama cheap to visit? ›
Panama isn't always expensive to visit. Traveling here is somewhat cheaper than traveling in Europe, Canada or the United States but somewhat pricier than Guatemala, Honduras or El Salvador.What are 5 interesting facts about Panama? ›
- There's a rainforest in the capital city. ...
- You don't have to change currency here. ...
- Its population figures are crazy. ...
- The sun rises and sets over two different oceans. ...
- It's home to the oldest operating railroad. ...
- It has two independence days.
The Panama Canal's greatest benefit was its effect on transportation between the east and west coasts of the U.S. The main benefit for Panama of canal construction was the introduction of new healthcare technologies.What are 3 benefits of the Panama Canal? ›
The Panama Canal expansion project would largely decrease the instances of bottlenecks, lower the average transit times by rendering raised capacity and allow for transit of Post-Panamax vessels.What is Panama's number one attraction for tourists? ›
Panama's most famous attraction is by far the Panama Canal, connecting the Atlantic and Pacific Oceans. Watching a massive ship, piled high with colorful containers, gliding quietly into the locks reveals the true enormity of this great feat of engineering.Can you drink the water in Panama? ›
In most places, the water in Panama is safe to drink. The Panama Canal Company had a high standard for hygiene, and as a result the water is clean in Panama City and much of the rest of the country. Bocas del Toro is one of the few places in Panama that does not have reliably safe water.Is Panama the happiest country? ›
Finland is in the top position in the world happiness report in 2022. Followed by Denmark and Iceland in second and third place. Switzerland, Netherlands, Luxembourg, Sweden, Norway, Israel and New Zealand, were among the top 10 'happiest' countries in the world .What do people in Panama value? ›
Panamanians value personal space, and thus touch during a conversation is somewhat unusual. Maintaining eye contact is also important and is seen as a sign of integrity. Titles are important in Panama. When addressing someone directly, use Don for men and Doña for women, followed by a surname.
By about 3 million years ago, an isthmus, narrow strip of land with water on either side, had formed connecting North and South America. The formation of the Isthmus of Panama also played a major role in biodiversity, making it easier for animals and plants to migrate between the continents.Is Panama a tax haven? ›
Panama's legal and tax structures make it a pure tax haven. Panama imposes no income, corporate, capital gains, or estate taxes on offshore entities that only engage in business outside of the jurisdiction. Offshore companies can engage in business locally—a rare perk—but will pay local taxes as a result.What is the biggest problem in Panama? ›
Human trafficking for sexual exploitation and forced labor remains a serious problem despite some government efforts to combat it. Both Panamanian and migrant workers in certain sectors—including the agricultural sector, where many workers are Indigenous people—are subject to exploitative working conditions.Is Panama famous for money laundering? ›
Risk index score of money laundering and terrorist financing in Panama from 2015 to 2021.
|Characteristic||Risk index score|
The economy of Panama is largely dependent on the mining, agriculture, and timber industries. The country has one of the largest copper ore reserves in the world, as well as large reserves of gold, manganese, and iron.Is tourism big in Panama? ›
Panama's tourism industry is one of the most diverse in the world, due to the country's natural abundance, massive hotel infrastructure, urban hub, and it's strategically easy to travel to location for airlines.Why is Panama a good retirement place? ›
Panama's beautiful beaches and warm climate have made it a popular location for Americans to retire in recent years. While this means you'll likely be able to find some fellow American retirees to befriend, simple economics means that the influx of American immigrants has resulted in a rise in the cost of living.Why is Panama considered one of the best countries to live after retirement? ›
The countries were ranked on the basis of factors such as cost of living, healthcare, climate, and retirement benefits. It seems Panama's pension program, Pensionado, has earned the country the first slot on the index.Is Panama cheaper to live? ›
Another reason that many consider Panama: It's possible to live in Panama for as low as $1,000 per month. However, this is only in very specific cities. It's not a country of rock-bottom prices like living in Thailand or even the affordable costs of living in Mexico.Is Panama people friendly? ›
Panama is a safe country to live in. Most Panamanians are friendly especially in the rural areas. Generally, Panamanians are not money orientated and not resentful of expats who are perceived as being wealthier. Armed policemen are a common sight in Panama City and tourist areas in particular, are very safe.
Hiring a maid to do the housework is popular among capitalinos (Panamanian Panama City dwellers) and expats alike. A full-time live-in maid costs around $250 per month, whereas as-and-when visits for quick cleans or cooking meals are usually priced at around $15 apiece.Is Panama safe to move to? ›
Whether you're comparing crime statistics, tourist guides, or travel advisories for the region's different countries, you'll find that Panama is one of the safest countries in Latin America.How much do doctors make in Panama? ›
|Job type||Median salary (USD)||Salary ranking compared to all cities|
|C Level Executive||$35,382||233/265|
Panama Crime Rate & Statistics 1990-2022.
|Panama Crime Rate & Statistics - Historical Data|
|Year||Per 100K Population||Annual % Change|
Panama took the top spot for the second straight year in the Gallup-Healthways Country Well-Being report, with Costa Rica second. Switzerland was the top European country, in fourth. At No. 23, the U.S. is one spot behind Israel and one ahead of Canada.Is Panama easy to travel? ›
Panama is compact enough to get around by bus, and there are just a few remote regions that can only be accessed by plane. Air Panama operates flights to every corner of Panama including Darién, Guna Yala, the Pearl Islands, the Azuero Peninsula, Chiriquí and Bocas del Toro.Do most people speak English in Panama? ›
The official language of Panama is Spanish, with about 95 percent of the population speaking this as their first language. English is also widely spoken in Panama by about 14 percent of the population.What is the cheapest time of the year to fly to Panama? ›
High season is considered to be January, November and December. The cheapest month to fly from United States is February.Is Panama a free country? ›
Panama enjoys all of the freedoms US persons and other westerners do, from the First Amendment freedoms of the press and free speech to freedom of religion. Anyone can live in Panama as is easily noticeable when one spends just a few minutes exploring the capital city's vibrant downtown area.What language is spoken in Panama? ›
Spanish is the official native language of Panama. But what kind of Spanish do they speak? There are many types of Spanish, but Castilian Spanish is spoken in Panama due to Spain's influence in Panama.
In Panama, they don't flush toilet paper down the toilet. The little trash bin they have next to every toilet is there for a reason and you should use it. Most businesses have septic systems and flushing any materials down the toilet will mean more regularly cleaning the tanks out.How can I save money in Panama? ›
- Eat at the local stands – Meals at local food stalls cost $3–4 USD. ...
- Avoid taxis – I found taxis here to be a complete ripoff. ...
- Car-share – If you do take taxis, share your ride. ...
- Refill your water – In most of the country, you can drink the tap water.
Family of four estimated monthly costs are 2,402$ without rent. A single person estimated monthly costs are 664$ without rent. Cost of living in Panama is, on average, 32.59% lower than in United States. Rent in Panama is, on average, 57.48% lower than in United States.Is Panama City good for travel? ›
Panama City is generally safe, however, pickpocketing can occur — especially on city buses. Always be vigilant and don't carry more cash on you than you're planning to spend. Leave your passport and credit cards (other than the one you may be using) back at the hostel/hotel, don't carry valuables in your purse.Is Panama a cheap place to visit? ›
Panama isn't always expensive to visit. Traveling here is somewhat cheaper than traveling in Europe, Canada or the United States but somewhat pricier than Guatemala, Honduras or El Salvador.Is Panama a poor or rich country? ›
Panama - Poverty and wealth.
|GDP per Capita (US$)||Panama|
Although Panama is a wealthy nation, not everyone feels prosperity. Rural and indigenous people often lack access to education, health care and political efficacy.What is Panama's main source of income? ›
The economy of Panama is based mainly on the services sector, which accounts for nearly 80% of its GDP and accounts for most of its foreign income. Services include the Panama Canal, banking, commerce, the Colón Free Trade Zone, insurance, container ports, and flagship registry, medical and health and tourism.Is Panama a good place to live? ›
Panama is an excellent place to live if you're looking for a comfortable, convenient, and exciting lifestyle on a budget. For many expats, Panama provides the kind of lifestyle they can only dream of achieving in their home countries at a fraction of the cost.Is Panama safer than America? ›
Panama remains relatively safe when compared to other Central American countries, yet crime rates are still higher than one would encounter in most of the United States.
Panama has high crime rates. Petty crime is more common than violent crime. Take care of your belongings, especially in transport hubs. Violent crime includes armed robbery and muggings.Is Panama safe to travel alone? ›
Most of the areas you'll find yourself visiting in Panama City are safe. The areas surrounding the Panama Canal and the collection of streets known as Casco Viejo are all safe to walk around, even as a solo female. (Casco Viejo contains many of the restaurants and hotels that tourists flock to.What is the best time to visit Panama? ›
The best time to visit Panama is between January and mid-April. This is the driest part of the year and shows off this tropical country at its most stunning. However, it's also worth considering traveling to Panama during the rest of the year, when you can experience local events and festivals.How much money do I need to live in Panama? ›
Average Cost of Living Across Panama: $1,120 – $4,000.
|Monthly Expenses||Costs (USD$)|
|Rent||$375 – $1,200|