|By: Cassidy Williams|
Economy of Panama is highly affected for its geographical position. Blessings of western economy and its unique policy has fueled the growth of the country.
Economy of Panama is actually depended on the service industry, banking, commerce and tourism sector. More over, the government's expenditure and the construction projects backed by the United States helped the economical condition to get in a high level.
Basically the economic growth came from the service sector. Because of the well developed service sector, 80% of the total GDP comes from this site. The key elements of service sectors are Panama Canal, banking, flagship registry, the Colon Free Trade Zone, insurance, container ports, medical and health.
Beside the service sector there are tons of industries that contribute in GDP. Some of the manufacturing industries are creating aircraft additional parts, adhesives, automobiles, cements, drinks, textiles. In an astonishing way the country is manufacturing the handmade artisan creation of Bush planes which are highly demanded by many entities.
The economy of Panama shows a good reflect of model GDP growth. Panama is the third highest country in the sector of per capita in Central America and the poverty rate of the country is 16 percent. Unemployment rate was 7.2% in the year of 2004.
One of the big differences between the economy of Panama and the economy of other countries are the highest levels of per capita income. In the world of development, Panama's economy is marking itself with lots of strong sites.
On the other hand, construction of the Panama Canal made the growth in economy faster. It started from the 1900s and till in the twentieth century Panama Canal has been more successful than any other sector. In 1985 per capita gross national product became twice the average in other countries of Central America and South America. However Venezuela and Argentina had higher per capita than the economy of Panama.
Economy of Panama had a plus point with their paper currency, the United States dollar. Though the balboa was the local currency of Panama, it was mixed up with the United States dollar. People of Panama can only get balboa coins. United States determined the Panama's money supply which came from Federal Reserve System. So for the Republic of Panama it was forbidden to print and devalue the currency and that made them enjoy the lowest inflation.
In 2002 the nominal GDP of the country was 11,691 million, 13,099 million in 2004, 14,004 million in 2005, and 15,141.9 million in 2006. This report was shown by the Office of Statistics and Census, Government of Panama. Growth from 2002 to 2006 has been especially strong in the transport and communications sector and was a major breakthrough in the economy of panama from 2002 to 2006. The calculation showed that this transportation and communication sector was the biggest contributor in the factor of GDP.
Although other sectors of the country's GDP generators contributed more or less in growth of the GDP; in 2003-04 the Real GDP has increased to 7.5%, 6.9% in 2004-05 and 8.1% in 2005-06.