le 38, Apartado 6959, Panama City 5
mailing address: American Embassy Panama, Unit 0945, APO AA 34002

Flag description: divided into four, equal rectangles; the top
quadrants are white (hoist side) with a blue five-pointed star in
the center and plain red, the bottom quadrants are plain blue (hoist
side) and white with a red five-pointed star in the center

Economy

Economy--overview: Because of its key geographic location,
Panama's economy is service-based, heavily weighted toward banking,
commerce, and tourism. Since taking office in 1994, President PEREZ
BALLADARES has advanced an economic reform program designed to
liberalize the trade regime, attract foreign investment, privatize
state-owned enterprises, institute fiscal reform, and encourage job
creation through labor code reform. The government privatized its
two remaining ports along the Panama Canal in 1997 and approved the
sale of the railroad in early 1998. It also plans to sell other
assets, including the electric company. Panama joined the World
Trade Organization (WTrO) and approved a tariff reduction that will
give the country the lowest average tariff rates in Latin America. A
banking reform law was approved by the legislature in early 1998.
The most important sectors driving growth have been the Panama Canal
and other shipping and port activities.

GDP: purchasing power parity--$19.9 billion (1998 est.)

GDP--real growth rate: 2.7% (1998 est.)

GDP--per capita: purchasing power parity?$7,300 (1998 est.)

GDP--composition by sector:
agriculture: 8%
industry: 18%
services: 74% (1997 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: 0.5%
highest 10%: 42.5% (1991)

Inflation rate (consumer prices): 1.4% (1998)

Labor force: 1.044 million (1997 est.)
note: shortage of skilled labor, but an oversupply of unskilled labor

Labor force--by occupation: government and community services
31.8%, agriculture, hunting, and fishing 26.8%, commerce,
restaurants, and hotels 16.4%, manufacturing and mining 9.4%,
construction 3.2%, transportation and communications 6.2%, finance,
insurance, and real estate 4.3%

Unemployment rate: 13.1% (1997 est.)

Budget:
revenues: $2.4 billion
expenditures: $2.4 billion, including capital expenditures of $341
million (1997 est.)

Industries: construction, petroleum refining, brewing, ce