According to the CIA World Factbook, Panama has an unemployment rate of 7%. A food surplus was registered in August 2008. On the Human Development Index Panama was ranked at number 60 (2008). In recent years Panama's economy has experienced an economic boom, with growth in real gross domestic product (GDP) averaging over 10.4% from 2006-2008. The Panamanian economy has been among the fastest growing and best managed in Latin America. Latin Business Chronicle has predicted that Panama will be the fastest growing economy in Latin America in the five-year period 2010-14, matching Brazil's 10% rate.
Like most countries in the region, Panama is feeling the impact of the global financial crisis, which threatens to undermine the social gains made in the past few years.
The expansion project of the Panama Canal, combined with the conclusion of a free trade agreement with the United States, is expected to boost and extend economic expansion for some time. This presents a historic opportunity to make further progress in reducing persistent poverty and income inequality.
Despite Panama's status as an upper-middle income nation - as measured by per capita GDP - it remains a country of stark contrasts. Perpetuated by dramatic educational disparities, over one-third of Panama's population lived in poverty in 2008 and 14.4% in extreme poverty.
Panama's economy, because of its key geographic location, is mainly based on a well developed service sector heavily weighted towards banking, commerce, tourism, trading. The handover of the Canal and military installations by the United States has given rise to large construction projects. A referendum regarding the building of a third set of locks for the Panama Canal was approved overwhelmingly (with low voter turnout, however) on 22 October 2006.
The official estimated cost of the building of the third set of locks is US$5.25 billion. The canal is of major economic importance since it pumps millions of dollars from toll revenue to the national economy and provides massive employment. The United States had a monopoly over the Panama Canal for 85 years but the Torrijos-Carter Treaties signed in 1977 began the process of returning the canal to the Panamanian government by 1999.