RISING INTEREST

Panama 2018 | TOURISM & RETAIL | REVIEW

Panama's tourism industry is relatively new compared to the region. However, in the short time the government has been focusing on it, the sector has taken off.

Today, tourism has a significant role in the economy of Panama, although it was not always the case. The sector is a relatively new one for the country; it was not until the mid-1990s that the government started taking the sector seriously; the country has invested billions of dollars in infrastructure and development programs aimed at boosting the sector.

The country has built its tourism industry into a major part of the services sector over the past decade. According to the World Bank, tourist arrivals to Panama have more than doubled in the 10 years leading to 2016. The country saw more than 2 million visitors in 2016, compared to fewer than 850,000 visitors in 2006. Receiving 2 million visitors is quite a feat for a country of only 4 million. And the country has attracted a range of visitors. In 2014, Panama received 40% of its visitors from North America, another 40% from Central America, and the remaining 20% from South America and Europe. Tourism has been one of the fastest-growing sectors in the country, along with commerce, construction, and banking, and has been a key factor behind the country's high annual GDP growth.

Tourists are drawn to Panama for a number of reasons. A huge attraction remains the engineering feat that links the Pacific and Caribbean oceans: the Panama Canal. The country is also rich in history. In Panama City's Casco Viejo neighborhood, visitors can explore Spanish settlements dating back to the 17th century. Tourists can also visit the historic Plaza de Independencia, where the country declared its independence from Colombia.
The country has much to offer its visitors. Within Panama City, tourists can find high rises and the luxury synonymous with other major metropolitan cities; however, what others cannot offer that Panama can is a rainforest within five minutes of the city. Elsewhere, the country offers some of the best scuba diving in the world, pristine beaches, and rich tropical rainforests.

The World Travel and Tourism Council (WTTC) has a promising outlook for Panama's tourism industry. In 2017, the country was ranked 56th in terms of the industry's relative size and contribution to GDP, and was placed 26th in terms of long-term growth through to 2028. While the country is not number one in the region—it has to compete with countries like Mexico, Chile, and Peru, which have long been destinations and have had decades to build tourism infrastructure, it is certainly outperforming many of its regional neighbors and holds one of the best outlooks.

Panama ranks above several other countries with rapidly rising tourism industries like Costa Rica, Ecuador, Belize, and Honduras in terms of the sector's total contribution to GDP, total contribution to employment, and visitor exports, the last of which the country is well above the Latin American average of USD2.6 billion, with the Panamanian figure at USD6.9 billion as of 2017.

According to WTTC, the total contribution of the tourism sector to GDP in 2017 was PAB8.5 billion, or approximately 14.5% of GDP. Total contribution to GDP includes the supply chain, effects from government and private investment, and induced income. WTTC forecast for 2018 puts the total contribution at just over PAB9 billion, or 14.6% of GDP. The country is on track for 5.6% per annum rise through to 2028, when the sector's contribution to GDP will reach PAB15.5 billion, representing 14.8% of GDP.

The tourism sector's contribution to employment is just as significant as it is to the country's GDP. In 2017, the sector in total contributed some 267,000 jobs, representing 14.4% of the country's total employment. WTTC forecasts a 2.6% rise for 2018, bringing the total number of jobs to 274,000, or 14.6% of total employment.