Always a strong economy in Latin America, with low inflation (thanks to a currency pegged to the US dollar), a stable democracy and key geographical position, Panama is now the strongest growing economy in Latin America.

Economic growth was 8.4% in 2006, continuing a strong five-year upward trend, and the International Monetary Fund (IMF) predicts Panama's economy is set to grow more than any other Latin American country this year.

Panama has for some time now been in a privileged position, not just in Central America, but in the western hemisphere. The Panama Canal, built at the start of the 20th century, turned this tiny tropical haven into a major shipping hub for the world's ocean trade.

Tourism now stands as the country's top source of income, receiving more than 700,000 visitors annually to its pristine beaches, vibrant rain forests and cosmopolitan capital city. The influx of visitors has also brought with it a boom in construction of hotels, condominiums, resort complexes and other services such as restaurants and shops, are springing up all over this vibrant city.

The Panama Canal has started construction on its $5.2 billion dollar upgrade and is promising to create up to 50,000 new jobs in the region, as well ensuring the Canal's competitiveness in world shipping for decades to come. In fact, analysts predict the expanded canal will directly account for doubling the country's gross domestic product (GDP) by 2025, and increase business investment in the Canal Zone by 40 per cent.

New projects to further stimulate the economy include a free trade agreement with the United States, currently in negotiation, the recent announcement by Occidental of a $6 billion regional refinery, and 14 new thermal and hydroelectric plants as well the Cinta Costera along avenida Balboa that will extend the coast line adding 12 lanes of highway for the traffic that will change the face of Panama city.

These factors and more, have given Panama a unique position in the Latin American world - as a leader of economic growth with a stable and thriving market for business and investment.

Economic Facts 2006

Population: 3.2 million

GDP: $25.29 billion - 8.4% growth from 2006

Unemployment: 8.8%

Inflation (CPI): 2.6%

External Debt: $9.99 billion

Economic Aid: $197 million

Exports: $8 billion - Primarily bananas, shrimp, sugar, coffee, clothing

Imports: $9.36 billion - Primarily capital goods, food, consumer goods, chemicals

Panama's economy is largely service oriented, accounting for about 70% of the GDP and 50% of jobs. Inflation is low, as the national currency (the balboa) is pegged to the US dollar.

The US is Panama's main trade partner, receiving 50% of Panama's merchandise exports, followed by the European Union. The main goods exports are agricultural products (81%), fuels and mining products, and manufactures. The main services exports are transportation and travel, largely related to the Canal, the Colon Free Zone, and the tourism industry.

Panama ranked 47th in the world on the Index for Economic Freedom, and 10th in the Americas, scoring top marks for business freedom, fiscal freedom, freedom from government, financial freedom, investment freedom and monetary freedom.

Panama's advanced healthcare system prides itself in offering the highest quality of medical care in its region. The newly built Hospital of Punta Pacifica - in Affiliation with John Hopkins Medicine International offers "a First Rate Digital Hospital of the highest quality, standard of care, security and technology; together with a system supported by one of the best hospital in the world, John Hopkins Medicine International".

Along with providing a state-of-the-art diagnostic and clinical care facility, Panama's physicians are almost all U.S. trained and are fully bi-lingual. Medical insurance is available for approximately $600-$800 a year per person (depending on individual characteristics and needs), and the average costs of common treatments are nearly 50% cheaper than in the U.S.

The Republic of Panama was created in 1903 when it declared its independence from Colombia. The United States helped Panama in it's bid for independence by sending troops to protect US economic interests in the Canal, then under construction.

In 1904 Panama passed a Constitution as an independent state, modeled on the Colombian Constitution. The Constitution was rewritten in 1941, and again in 1972, following a military coup, and remains in its current form after several reforms in the intervening years.

Panama's government is structured as a representative democracy, with the president serving as both head of state and head of government. The current President of the Republic Martín Torrijos, of the Democratic Revolutionary Party, was elected to a single, five-year term in 2004 by popular vote, along with 12 cabinet ministers.

The legislative branch consists of a National Assembly, whose members are also elected by popular vote to five-year terms. The judicial branch is separate from the executive and legislative branches of government, and consists of a Supreme Court of Justice, Tribunals and appointed judges.

President: Martìn Torrijos

Vice-President: Samuel Luis Navarro

Second Vice-President: Rubén Arosemena Valdés

Political Parties and Leaders

Democratic Revolutionary Party (PRD) - Martin Torrijos

Democratic Change (CD) - Ricardo Martinelli

National Liberal Party (PLN) - Anibal Galindo

Nationalist Republican Liberal Movement (Molirena) - Jesus Rosas

Panamenista Party (PA- formerly the Arnulfista Party) - Mireya Elisa Moscoso Rodriguez

Popular Party (PP- formerly Christian Democratic Party or PDC) - Ruben Rosemena

Solidarity Party (PS) - Jose Raul Mulino

Government Ministries:

The country is divided into nine provinces, three indigenous territories* and two territories**:

Bocas del Toro

Chiriqui

Cocle

Colon

Darien

Herrera

Los Santos

Panama

Veraguas

Kuna Yala*

Emberá*

Ngöbe-Buglé*

Kuna de Madugandí**

Kuna de Wargandí**

Perhaps what has given Panama the strong reputation for retirement is the Visa de Turista Pensionado program for international residents, a plan that is second to none. It allows for maximum benefits, yet demands little effort from participants. A person does not need to be retired to qualify. The only requirements are that the applicant is over 18 years old and receives monthly foreign income of at least $500USD/month, either from public pension, social security, disability or a private corporate pension plan.

In return, participants of the program receive:

-Indefinite residency in Panama, regardless of duration of stay in the country

-Exemption from property taxes for up to 20 years

-Exemption from taxes on foreign income still being earned

-Exemption from taxes on imported household good or cars

-Up to 50% discounts on airfare, popular restaurants and fast food chains and entertainment

-Up to 50% discounts and advantages at the bank with loans, mortgage interest rates and

-Up to 25% discounts on all professional and technical services

-Up to 20% discounts on drugs and health care services including hospital, dental and optometry

Applying for the Pensionado Visa is simple. With the help of an attorney, a one-time application is usually processed within a month and there is never the need to renew your Pensionado Visa. No additional fees are ever required.

Panama's health care system is very convenient and beneficial for retirees. Almost all of Panama's doctors speak fluent English, as most have been trained in top schools throughout the unites states and Canada. Health care standards are top notch and is extremely affordable.

A warm culture, year-round tropical weather, virgin wildlife and breathtaking environment make Panama a veritable paradise for the young and old alike. Panama is the ideal destination for the both nature lovers and urban city lovers. Whether it's the city, the mountains or beaches that grab your interest, the country offers everything from world-class dining and spas, beautiful golf courses and unlimited opportunities for bird watching, fishing and a luxury lifestyle most people only dream about.

Panama is by far one of the safest countries in Central America. In 1990, following the example of Costa Rica, its neighbor to the north, Panama abolished its army and amended the constitution to prohibit the creation of a 'standing military force'

Crime rates are low, even in the urban centers, and a stable political climate and friendly population make this a welcoming country for foreigners. Tourists are well regarded and respected by the locals who are always willing to help with directions or assist you in any way.

Panama City

As with any major city, normal precautions are recommended. Do not leave belongings unattended, as petty theft can occur, particularly in bus stations, open-air markets, and tourist areas. Do not walk alone after dark, and stay within well-known areas in the downtown core. Parts of the 'Old Town', or Casco Viejo, are best avoided, and it's recommended to keep signs of affluence to a minimum when travelling on foot.

There is a curfew in effect for minors; anyone under 18 years of age should not travel unaccompanied by an adult late at night, as they may be detained by police and face a fine of $50.

Food and Water

Tap water in Panama City and other cities is chlorinated and safe to drink; bottled water is recommended in rural areas. Milk is pasteurised and dairy products are safe for consumption. Local meat, poultry, seafood, fruit and vegetables are generally considered safe to eat.

Immunization and Vaccination

Wearing mosquito repellent is recommended to prevent the transmission of dengue fever, a mosquito-borne virus with severe flu-like symptoms.

The World Health Organization recommends yellow fever vaccination for travelers going to Darién, Chepo and San Blas, with a low to negligible risk of malaria along some areas of the Caribbean coast.

Water Safety

Panama has endless expanses of white, sandy beaches, coral reefs and islands to lure water-lovers to a number of activities including; swimming, boating, kayaking, snorkeling, scuba diving, and fishing.

Normal precautions should be taken when swimming in the ocean. Avoid swimming near rocky areas and in heavy swells, and don't swim alone. Swimmers should be extremely cautious when venturing to unknown beaches; strong currents and tides can exist, and signs are rarely posted.

Those on boats should ensure that all emergency equipment, including life vests and radio, are in place before setting sail.

Roads

As in the US and Canada, traffic moves to the right, and seat belts are required by law. The country's road infrastructure is in good condition and some of the best in Central America. Roads in and around Panama City are excellent, with several highways, including the PanAmerican highway stretching across the country.

In rural areas you will encounter unpaved roads and some potholes; heavy rains can make some roads impassable, particularly in the rainy season.

Public transportation is cheap and generally reliable, with excellent discounts for seniors and retirees.

Panama has a number of laws and incentives in place to attract and protect real estate investment by foreigners. In general, foreigners are allowed by law to own real estate in Panama, with few restrictions.

However, any foreigner considering a real estate purchase in Panama should enlist a legal representative to perform due diligence on the property and oversee the details of the transaction, to ensure there are no unpleasant surprises down the road.

Properties in Panama should generally be registered with the Public Registry (which has a searchable database)and the Land Registry Office. Registered properties are knows as titled land. However, there are many parts of Panama's territory, particularly the more remote, rural areas, that have not yet been officially inscribed.

In these cases, ownership may stem from possession rights, when a person/family has lived on or worked the land for more than five years. These properties can be purchased, but require a little more work to ensure the right of ownership is properly transferred.

Rights and Restrictions on Foreign-Owned Property

The right to private property is guaranteed in Panama's Constitution. The right for foreigners to own real estate in Panama is well-enshrined in Panamanian law. Law 54 of 1998 guarantees foreign investors the same property rights and responsibilities as national investors with no restrictions except those outlined in the Constitution and other laws (such as environmental laws). It also guarantees the right to dispose of and repatriate the capital, profits, dividends, etc. relating to real estate investments.

The following exceptions apply:

foreigners cannot own land within 10 kilometers of national borders

foreigners cannot own islands, beaches, lake and river shores (except under special circumstances). Concessions to build in these areas can be granted in some cases.

Real Estate Taxes

Land tax of up to 2.1% applies to all owned land in Panama, titled or not, valued above $30,000 ($150,000 for farmland).

Upon the sale of a property, income tax is also applicable (rates vary depending on whether the transaction is part of one's usual business, or a one-time event), as well as a 2% transfer tax. The transfer tax can be exempted under some of the government's real estate incentives, or if the land is donated to a spouse or immediate family member.

Island and Coastal Properties

Neither foreigners nor nationals can own beaches, lake or river shores, except under special circumstances, as these are considered part of the state's natural heritage. However, concessions of up to 60 years, with a 30-year extension, can be granted in these areas, under Law 2 of 2006. All beachfront property must allow public right of passage for 22 meters from the high tide line.

Islands were once also off-limits to purchase by foreigners, however Law 2 now allows foreign persons or corporations to purchase up to 50% of an island's surface for tourism projects. This same law limits development to 30% of the total island's surface. Aboriginal lands, protected areas and properties located within ten kilometers of national borders continue to be excluded.

Tax and Investment Stability

Law 54 also provides ten years' tax and investment stability for those who invest at least $2,000,000 in certain sectors, including tourism, industrial, agricultural, exports, agroforestry, mining, export processing zones, commercial and petroleum free zones, telecommunications, constructions, port and railroad development.

This means the laws and tax regimes in place at the time the investment is made, including any incentives and benefits, will continue to apply to qualified investors for ten years, regardless of any changes that are made to the law during this time. This provides a stable and predictable setting for investments, without fear of radical changes.

The tourism sector in this case is of particular interest to real estate investors, as hotels, condominiums, housing for retirees, etc., are all considered of tourism interest. Those interested in qualifying for the investment stability benefit must apply to the Ministry of Commerce and Industry.