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For years, Panama occupied a singular place in the minds of international investors. Mention the country and a near-automatic chain of associations followed: the Panama Papers, offshore shell companies, opaque bank accounts, aggressive tax structuring. That reputation had some basis in reality. It was also partly exaggerated, and above all, it bears almost no relation to the country's current situation.
What has been unfolding in Panama since 2019, and with greater urgency since 2023, deserves careful attention from anyone tracking emerging markets in Latin America. The country is undergoing a deep transformation of its institutional, fiscal and financial framework. That transformation is not yet complete. It is not without residual grey areas. But it is real, well-documented, and formally recognised by the most demanding international bodies.
For an investor seeking international portfolio diversification, the Panama of 2026 is not the Panama of 2016. It warrants a fresh look, with an updated analytical lens.
A tax haven built on deliberate choices: 2000-2015
Over several decades, Panama constructed an economic model partly grounded in attracting foreign capital through an aggressively territorial tax system, high banking secrecy, and exceptionally permissive offshore company legislation. The underlying logic was simple: income generated abroad went untaxed in Panama, and the legal structures on offer allowed residents of high-tax jurisdictions to shelter assets with minimal transparency requirements.
That model attracted capital, but also less reputable flows. Panama was placed on the FATF grey list in 2014, then removed in 2016 after committing to greater financial and banking transparency. Those commitments were subsequently judged insufficient, and the country was relisted in 2019.
In 2016, the Panama Papers scandal exposed publicly what many had long known without saying: the country was being used on a massive scale for aggressive tax structures — at volumes and involving profiles that went well beyond anything defensible as standard legal optimisation. The reputational damage was global and long-lasting, complicating even ordinary banking transactions for investors operating entirely within the law.
Practical consequences for investors
The reputational fallout had concrete operational effects. International wire transfers to and from Panama were subject to heightened scrutiny by correspondent banks. Some European banks refused outright to execute transactions involving Panamanian entities. Account openings for non-residents became slow, difficult, and burdened with unusually demanding KYC procedures.
For an investor looking to acquire property in Panama City, this operational reality was a meaningful deterrent — entirely independent of the underlying quality of the real estate market.
FATF grey list removal: a significant signal
In October 2023, the FATF formally removed Panama from its grey list, acknowledging that the country had strengthened its anti-money laundering and counter-terrorism financing framework, and had implemented substantial reforms that marked a major step forward in international transparency.
This decision was not handed over automatically. It followed several years of concrete legislative and regulatory reform: strengthened reporting obligations for financial intermediaries, a modernised beneficial ownership register for companies, participation in the OECD's automatic tax information exchange mechanisms, and tougher sanctions against money laundering practices.
For investors, the grey list removal carries immediate practical meaning. International correspondent banks have progressively lifted their restrictions on Panamanian transactions. Account openings for non-residents have become more accessible. Wire transfers from Europe to Panamanian accounts are less systematically blocked or questioned than they were between 2019 and 2023.
An economy finding its footing on the international stage
The current government under President Mulino, in office since July 2024, has made international credibility one of its stated priorities. In 2025, Panama delivered the largest fiscal correction in Latin America. The public sector primary balance improved by $2.267 billion, cutting the deficit from 3.32% to 0.67% of GDP. The central government's current savings turned positive for the first time in years, confirming that the state is beginning to fund its operations with its own revenues rather than relying systematically on debt.
The government is focused on improving tax collection through enhanced enforcement mechanisms, not through new taxes or rate hikes. It will also draw on Canal revenues in the form of royalties and dividends representing 17% of fiscal receipts, equivalent to roughly 3% of GDP.
This policy choice is worth understanding. Panama is not seeking to tax its residents or investors more heavily. It is seeking to collect more of what is already owed, reduce internal evasion, and lean more heavily on the Canal's structural revenues to balance its books. This is an approach that preserves the country's fiscal attractiveness for foreign investors while improving the state's international credibility.
A regional hub with structural advantages no other country can replicate
Panama occupies a geographic and economic position that belongs exclusively to it. Crossroads between the Atlantic and Pacific, land bridge between North and South America, and home to one of the most strategically important maritime passages on the planet: these are permanent, non-replicable advantages that drive growth regardless of the political cycle.
The Panama Canal Authority anticipates record revenues of $5.6 billion for fiscal year 2025, up 12.7% year-on-year. In July 2025, the Authority unveiled a major $8.5 billion ten-year investment plan covering an 80-kilometre gas pipeline, two new port terminals, and a new reservoir on the Rio Indio.
The export-oriented economy, centred on trade, logistics and financial services, is projected to deliver average growth of 4% between 2026 and 2029 — above both regional and global averages, even if that pace is more measured than the peak years of the 2010s. The economy is fully dollarised, which eliminates currency risk for dollar-based investors and materially reduces monetary volatility for all others. This is a concrete operational advantage, particularly relevant in a medium-term investment horizon.
A recovery following an external shock
Recent figures should however be read honestly. The country recorded growth of 2.9% in 2024, down from 7.3% in 2023. The slowdown was caused by the closure of the Cobre Panama copper mine and its social fallout. That closure, forced by significant public protests, knocked roughly five percentage points off GDP. It was a serious blow, but an exogenous and situational one, not a sign of structural economic failure.
Panama posted robust growth of around 4% in 2025, positioning itself well above the regional average. That expansion was driven by transport and logistics, financial services, trade and construction. The recovery is confirmed by both the IMF and rating agencies, and 2026 projections point to continued momentum on the same trajectory.
Construction activity will benefit from major infrastructure projects, partly financed by international partners: the metro Line 3 extension including a tunnel under the Canal, rural road rehabilitation, and a fourth bridge across the Canal. These are indirect but real drivers of real estate demand, particularly in the peripheral zones of Panama City.
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An exceptionally open ownership framework for foreign buyers
This is one of the most noteworthy features of the Panamanian market, and one of the least frequently highlighted: foreign nationals can purchase and own real estate in Panama under precisely the same conditions as Panamanian citizens. Fee simple title — the equivalent of full Western freehold — applies without general restriction to foreign buyers. There are no quotas, no mandatory holding structures, no lease-in-lieu-of-ownership requirements. This is a fundamental distinction from markets like Bali or several Southeast Asian jurisdictions where foreigners can only access leasehold arrangements.
Several mechanisms further encourage foreign real estate investment: the Pensionado law provides tax reductions and exemptions for qualifying purchasers; certain properties benefit from property tax exemptions lasting 5, 10 or even 20 years depending on their construction date; and it is possible to establish a local company to manage investments with an optimised estate planning structure.
Prices and yields: an equation that still holds
In Panama City, premium real estate prices in established neighbourhoods such as Costa del Este and Punta Pacifica ranged between $2,500 and $3,500 per square metre in 2025. Coastal areas like Coronado and Pedasi offer more accessible entry points, with beachfront villas priced between $1,500 and $2,500 per square metre.
The city-wide average stands at $1,804 per square metre, with annual appreciation of 2.38%. These levels remain well below comparable markets such as Miami or Dubai, while offering urban characteristics and a quality of life that justifies growing international interest.
Forecasts project annual price increases of 5 to 7% in Panama City through 2030, supported by projected population growth of up to 20% in certain strategic zones. These projections merit the usual caution, but they rest on real drivers: demographic growth, expatriate inflows, infrastructure development, and the country's regional appeal as a base for international businesses.
At FFI, we are currently conducting an in-depth review of the Panamanian market for our clients. It would be inaccurate to say all our questions are already answered. Several points warrant serious further investigation before we issue precise recommendations.
What is holding our attention positively
The FATF grey list removal is a normalisation signal we take seriously. Banking transaction fluidity has improved in a measurable way. The economy has returned to a solid growth trajectory after the 2024 slowdown. The property ownership framework for foreigners is among the most open in the world. Full dollarisation eliminates currency risk. And the Panama Canal remains an economic engine with no equivalent in Latin America.
What still requires deeper analysis
The fiscal position remains stretched. In 2026, Panama's gross financing requirement will reach 9% of GDP, with significant debt repayments and rising interest costs. How the government manages these obligations without increasing the tax burden on investors or property owners remains a variable to watch closely.
The domestic political landscape has experienced friction. Protests erupted in April 2025 against social security reform, leading to clashes with authorities and a sharp drop in President Mulino's approval ratings. Political cohesion remains a parameter to monitor.
The question of Canal port management — previously handled by Hong Kong operator Hutchison and now subject to geopolitical pressure linked to US concerns over Chinese interests in the zone — introduces a layer of geopolitical uncertainty that our analysis cannot set aside.
Finally, secondary market liquidity in Panama City remains below that of markets like Dubai or Lisbon. Reselling a property can take time, and transaction timelines are frequently longer than buyers initially anticipate.
The Panama of 2026 is not the Panama of the Panama Papers. That statement needs to be made plainly, because too many investors are still applying a decade-old analytical framework to a country that has moved on. Panama has made real, internationally recognised efforts to normalise its financial and legal environment. Its economy has returned to a solid growth path. Its real estate market offers access conditions for foreign buyers that are exceptionally favourable, in a city that continues to assert itself as the region's pre-eminent hub.
None of this means everything is resolved, or that all questions have been answered. Investing in Panama in 2026 demands rigorous analysis, thorough due diligence, and guidance from professionals with genuine on-the-ground market knowledge. That is precisely the work we are in the process of completing, and we will return to our clients with specific recommendations once that analysis is finalised.
In the meantime, Panama clearly deserves a place on any serious investor's list of markets to examine. It is no longer the opaque tax haven of ten years ago. It may be something more interesting: a market in the process of maturing, in a country reinventing itself, with economic fundamentals that few other Latin American countries can match.
We are currently conducting an in-depth market review and will return with detailed recommendations. In the meantime, our team is available for any preliminary discussion about your project.
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