Germany has maintained diplomatic relations with Panama since 1951. Panama’s basic democratic order, political stability and consensus with Germany on many international issues as well as its open, dynamic market economy and regional integration form a sound basis for the good relations between the two countries.

Among Central American countries, Panama is a main market for German exports and investment. The main advantages offered by Panama as a business destination for German companies are the country’s importance as a highly competitive regional services centre with its canal, ports, aviation hub, special economic areas, banks and insurance companies as well as its investor-friendly legislation. The German-Panamanian Chamber of Commerce and Industry has approximately 150 member companies and belongs to the network of German Chambers of Commerce Abroad. There are several renowned German companies operating in Panama, some of them with Panama as their regional headquarters.

Germany ended bilateral development cooperation with Panama in 2004 on account of the country’s relatively high level of development. Panama is continuing to participate in regional cooperation projects supported by Germany via the Central American Integration System (Sistema de la Integración Centroamericana, SICA) and as part of the strategic partnership with the United Nations Economic Commission for Latin America (ECLAC). These projects focus inter alia on sustainable, low-carbon development, energy efficiency, social cohesion, human-rights based migration management and the implementation of innovative private sector Green Recovery projects. The Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection provides support for the protection of wetlands and woodland areas in Panama through the United Nations Development Programme (UNDP). Two projects to restore (forest) landscapes in Panama continue to receive funding from the Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection and the EU.