Germany has maintained diplomatic relations with Panama since 1951. Panama’s 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.

Panama is the main market for German exports and investment in Central America. 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 zones, 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 continues 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 development by promoting renewable energy gained from geothermal heat, the efficient and transparent use of public funds in a manner that will foster social cohesion, and the implementation of innovative Green Recovery projects with the private sector. Specialist discussions on topics such as climate-resilient urban development are organised through regional exchange mechanisms, and involve local and national institutions from Panama and other countries in the region. The Federal Environment Ministry’s International Climate Initiative (ICI) provides support for the protection of wetlands and woodland areas in Panama through the United Nations Development Programme (UNDP). In addition, the Federal Environment Ministry and the EU are providing funding for a project to restore (forest) landscapes and for a project on sustainable supply chains in Panama. Activities to develop greater expertise in the field of green hydrogen are being implemented through the EU-funded programme EUROCLIMA.