Country Trade Profile: Panama

Wed 8 May 2024
Posted by: Danielle Keen

The next election in 2024’s vote-heavy calendar is especially significant for trade. Home to one of the world’s two major trade-facilitating canals, Panama plays a significant role in global shipping, which has recently been under threat from an ongoing drought.


The campaign frontrunner, Jose Raul Mulino, won the Panamanian election, held Sunday (5 May), with 34.3% of the vote. The former minister was seen as an effective proxy for former president Ricardo Martinelli, who was sentenced to ten years in prison for money-laundering offences. Martinelli remained active on social media throughout the election’s campaign period from the safety of the Nicaraguan embassy in Panama City. 

Seven candidates vied for Panama’s presidency, following the Supreme Court’s rejection of a call to bar Mulino from standing. His candidacy was challenged because he hadn’t been selected through the usual primary process, but stepped in last-minute following incumbent Ricardo Martinelli’s conviction.

All four panellists at a Canning House webinar on the implications of the election agreed that, if Panamanian elections included a second run-off stage, Mulino would have lost to Ricardo Lombana, a lawyer who ran on an austerity, anti-corruption platform.

Speaking at the webinar, political journalist Dalia Pichel emphasised that, although Mulino has Martinelli’s backing, he’s not simply a puppet, saying “he also ran on an economic prosperity platform” while warning that “he’s promising money that is just not there”.

This was echoed by political analyst Juan Diego Alvarado, who told the Guardian that “people have always justified Martinelli by saying, ‘He stole but he got things done.’”

“The economic conditions that carried that growth are no longer there, but the memory is powerful.”

According to Reuters, an improved economy, with more jobs and increased security, were cited by voters as their main reason for supporting Mulino.

Trade profile

Panama’s biggest export by far is copper ore, worth almost US$3bn in 2022, according to the Observatory of Economic Complexity. Another political issue going into the election was maintaining national control of Panama’s most lucrative copper mine, Cobre Panama, which accounts for an estimated 5% GDP.

Last year, Canadian company First Quantum’s bid for a controlling stake sent Panamanians to the street in protest, contributing to the eventual quashing of the takeover attempt.

However, the mine issue could potentially dog Mulino’s presidency. Another speaker at Canning House’s webinar, Banctrust head of research and strategy Ramiro Blazquez, noted that First Quantum is now seeking compensation worth $20bn – “a quarter of GDP”.

Beyond copper, ships also drive Panama’s export revenue; passenger, cargo and special-purpose ships contributed a combined $886m to the country’s economy in 2022.

However, its biggest contribution to global trade isn’t its own trade receipts but the trade it facilitates. The Panama Canal, opened in 1914, reduces shipping journeys by at much as 8,000 nautical miles for vessels that would otherwise need to navigate Cape Horn at the tip of South America. A recent drought has severely diminished the shipping volume that the canal can accommodate, creating severe delays as ships queue for weeks to secure passage.

Another commentator at Canning House’s webinar, who wished to remain anonymous, warned that Mulino would not be able to follow Martinelli’s lead and “extract money” from the canal while placing high costs on businesses.

UK-Panama trade

Trade between the UK and Panama has fallen significantly in the year up to the end of 2023. At £737m, bilateral trade fell by almost half (£624m), according to the Department for Business and Trade.

Reduced trade volumes were recorded across both countries’ goods trade and services imports from Panama. The only boost to trade came from UK services exports, which quadrupled in this period, rising £308m, to reach a total of £380m for the year.