Panama vs. Costa Rica: The Great Debate Continues…

I am often asked about the differences between Costa Rica and Panama and I always defer, knowing the answer depends entirely on individual taste. I try to ask questions so I’ll have a better idea of what is important individually, because some of the differences between the two neighboring countries are major and others, minor.

The sunny weather, beautiful beaches and magnificent rainforests, lower cost-of-living, modern amenities and good healthcare have been drawing expats to both countries for years. I think it is safe to say Costa Rica started attracting retirees and adventure seeking individuals before Panama became the newest darling of the relocation crowd.

So, let’s talk about the differences because there is a lot to consider.

The Weather

The weather is pretty close. Panama is the most southern country in Central America with Costa Rica just to its north, but that makes a difference. They both enjoy prime beach locations on the Pacific Ocean and the Caribbean Sea with miles and miles of beaches. The interiors of both countries have higher elevation, cooler temperatures and a different lifestyle than the beach communities.

Both countries tend to miss a blunt hurricane hit, but they both receive effects of storms riding out just to their north. In 2010 Tropical Storm Tomas incurred death and destruction in Costa Rica. There have been other strong storms lash Costa Rica but the only known tropical storm to make landfall in Panama was Martha in 1969. Because Martha was not strong, due to the rotational limitations of being so close to the Equator, the damage was mitigated.

Both countries are tropical and subtropical. Costa Rica has a dry season from December to April and a rainy season May to November. Panama has a prolonged rainy season May to January and a shorter dry season, January to May. The exception to that is the area in and around Coronado, Panama which is located in the “dry arch”. This section of Panama, from Chame to Playa Blanca, receives much less rain than the rest of Panama or Costa Rica but still enjoys beautiful beaches and modern amenities.


Panama is physically larger than Costa Rica with 75,420 square meters of land as opposed to Costa Rica’s 51,100 square meters, but they are both small countries. Costa Rica has more population with 4,755,234 people vs. Panama’s 3,608,431 which makes it a little more dense. Their main cities, San Jose in Costa Rica and Panama City in Panama, are close in population with 1.515 million residents in San Jose and 1.426 million in Panama City.

Panama City is the business center of Central America and is much more developed than the capital of Costa Rica. In Panama you will find gleaming skyscrapers and the proliferation of high profile offices for many European and North American companies. Streets are better marked in Panama City and infrastructure is much more developed including two recent major projects: the doubling of the Panama Canal at a cost of $5.3 billion and the metro system worth $1.2 billion.

Only Costa Rica has volcanos and two of those are currently active. In 2010, the same year as tropical storm Tomas, Arenal, one of the active volcanos, erupted and caused damage in San Jose and surrounding regions. In 1968 the volcano, Irazu erupted and destroyed the town of Tabacon, just east of San Jose. The volcanic ash has, however, developed beautiful black beaches along Costa Rica’s Pacific Ocean coast.

Healthcare and Happiness

In Costa Rica you can often hear Ticos (as the locals like to be called) saying “Pura Vida” or “Life Is Good” and the population is indeed happy. A recent Gallup poll reported that 81% of the Ticos were happy compared to only 79% of those living within the United States. It should be noted, that while Costa Ricans are happy, Panama ranked just ahead of them in that poll, coming in with 82% happy people.

Costa Rica also ranked high when it comes to healthcare. In 1949 they disbanded their military and they funneled the money toward other projects including healthcare and education. Costa Rica has a Universal Health System covering their entire population. The Caja Costarricense de Seguro (CCSS) is a system of hospitals and clinics that provide care to all Costa Ricans but it should be noted that expats and others cannot use the system unless in an emergency. Expats who gain residency, are able to purchase insurance and the right to access CCSS at approximately $100 a month. But, getting an appointment or surgery scheduled, is difficult because of professional limitations. There are only 1.2 hospital beds per 1,000 people in Costa Rica and 1.32 physicians as opposed to Panama which has double the hospital bed capacity at 2.4 and more physicians at 1.5 per 1,000 population.

Panama provides open access to everyone, accepts most foreign insurance plans and has modern facilities such as Hospital Punta Pacifica, a state-of-the-art facility affiliated with Johns Hopkins Health. The joint venture was developed by a partnership between local physicians and business leaders who wanted to raise the standard of health care in the region.

This attention to healthcare has driven the life expectancy for both Costa Ricans and Panamanians to rise significantly. Currently, females can expect to live to 81.01 years in Costa Rica and 81.22 years in Panama. In Canada that figure is 84.6 years and in the United States, 82.2.


One area where there is little comparison is safety. Panama is considerably safer than Costa Rica. The United States Department of State warns that:

“The incidence of crime in Costa Rica is high and has adversely affected the traveling public. US citizens have been victims of violent crimes including murder, sexual assaults, robberies and car jackings. Armed robberies can occur even in daylight and on busy streets.”

The US Department of State does warn that in Panama, “travel into the Darien region is not advisable and that areas bordering Colombia “may be cause of concern due to drug trafficking.I certainly would not suggest anyone go into the Darien, which is generally off limits to even the most adventurous, and both Panama and Costa Rica are caught in the drug traffic pattern from Colombia to Mexico. Nonetheless, Panama is generally more safe than most US cities.

Beach Living

Both countries have well developed beach towns that cater to their growing expat populations.  Both offer a wide variety of housing options from high rise, ocean-front condominiums, to small beach houses with a single hammock. Both have large resorts, which bring in international visitors by the plane load each week to visit JW Marriott and Wyndham type facilities. Panama boasts a beautiful Waldorf Astoria and Costa Rica, a Four Seasons.

Costa Rica’s northern Pacific coast area, known as the Gold Coast, has less rain and more sun than the rest of the country and it has plenty of amenities, but is not as developed as some other regions in the country. Jaco, a community in the Central Pacific region of Costa Rica, is well developed but located one and a half hours to two hours driving from San Jose.

Panama has a long beach region loaded with everything needed for first-world living, such as highly developed medical care, good restaurants and 24-hour grocery stores. Located right on the Pacific Ocean is Coronado, a community just one hour’s drive from Panama City. That makes it a little more accessible when flying into an international airport from North America or Europe as opposed to Costa Rica whose closest beach area (Gold Coast) is a two and half hour drive from the capital city. The rest of the beach area in Panama is located just up the PanAmerican Highway and about 90 minutes drive from Panama City.

City Fix

I love living on the beach in Coronado, but every so often I need to have a “city fix” and, in my opinion, there is no better place to do that than Panama City. There are so many fine restaurants and cultural opportunities that it is hard for me to choose which ones I want to attend. Panama’s National Theatre, which is located in the old town of Casco Viejo, is a gem of a building and has a seating capacity of 853, so there are many top companies of theatre, opera and ballet that come to perform in addition to the local organizations.

In the heart of San Jose, the National Theatre is one of the capital city’s most popular tourist attractions with its ornate Neo-Classical building. Equally impressive productions can be seen there.

Both Costa Rica and Panama have National Symphony Orchestras and fortunately in Panama, many are offered for free.

Neither Costa Rica or Panama have the level of culture you will find in New York or London, but what is offered is much more accessible and affordable. These productions are a little more laid back, not as pretentious and simply more fun.


According to the American news magazine, Forbes:

“Panama’s dollar-based economy rests primarily on a well-developed services sector that accounts for more than three-quarters of the GDP. Services include operating the Panama Canal, logistics, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism. Additionally, economic growth will be bolstered by the Panama Canal expansion project.”

In contrast, Costa Rica has stumbled in the past few years. According to the same Forbes report, “Costa Rica’s economy contracted 1.3% in 2009 but resumed growth to 4.5% in 2012. The bad news is that Costa Rica had begun to flourish as an importer of microchips, but computer giant Intel closed operations at the end of 2014 and moved 1,500 jobs to Malaysia, Vietnam and Cambodia. The microchip industry accounted for 20% of Costa Rica’s economy.

The American newspaper, USA Today, reported that:

Panama’s government is extremely pro-business and pro-investor. Costa Rica, on the other hand, is much more bureaucratic, with slower processes and higher taxes and fees.


You can easily hire a gardener, cleaner, or a person to cook your meals for less than $25 a day in either country. The difference is that you will find people tend to show up more often in Costa Rica than they do in Panama. There is a real Mañana attitude in Panama which can drive some North Americans to distraction.

Part of the reason the Ticos tend to show up is that there is somewhere between 300,000 and 500,000 Nicaraguans in the country illegally looking for work. This influx of people has put an incredible strain on the social programs offered by Costa Rica and it has driven the government to develop regulations which are aimed at the illegals, but which also negatively impact the expats such as access to healthcare.


If you plan on purchasing property in Costa Rica you must be aware of the legal rights of the “precaristas” or squatters. According to the English language publication, The Costa Rica Star:

“Squatters of private property in Costa Rica, particularly those that trespass land owned by foreigners, are more than a just a nuisance. They are reminders of this country’s painful transition from an agricultural nation to an industrial and consumer society. Many foreign landowners have come to learn the hard way about Costa Rica’s murky agrarian court proceedings, and in some cases the squatting ends up being justified.”

While I am certainly not an expert on this topic, I did some information gathering from an attorney who practices in San Jose. He simply smiled and said “let me remind you of a recent decision where 425 hectares were expropriated from a group of Dutch entrepreneurs and given to squatters. It took 18 months of legal wrangling but the squatters won. That ruling came down December 12, 2013, so not that long ago.”

Because we don’t have anything like those laws in Panama, I had to ask him about the reasons behind such laws. “The locals feel that people who come in, purchase property and then don’t work the land, simply don’t deserve the right to hold the land when others need it to live. If the land is going to sit empty, then it is the right of the local people to take back the land,” he responded.

When purchasing property in Costa Rica make sure you know your rights and be aware that if you have squatters, within the first three months the owner has most of the rights, between three months and a year it takes a court order to remove the squatters and after a year, they can take legal assumption.


The US State Department warns against driving in Costa Rica:

“The road infrastructure—street conditions, bridges, road signage—is not very developed, so be patient.” The tourist guide book, Frommer’s, goes a little further: “Renting a car in Costa Rica is no idle proposition. The roads are riddled with potholes, most rural intersections are unmarked, and, for some reason, sitting behind the wheel of a car seems to turn peaceful Ticos into homicidal maniacs.”

Because the economy has been good in Panama for a prolonged period and the government stable, Panama has been able to develop a solid infrastructure in terms of roads and bridges. The US State Department reports:

Panama’s roads, traffic and transportation systems are generally safe, but frequently traffic lights do not exist, even at busy intersections.” 

Nonetheless, traffic in Panama City can be difficult because there are simply too many cars, but the new Metro System is helping to ease the situation.

Green Living

Both Panama and Costa Rica generally live in harmony with nature, but Costa Rica has gone a long way in developing eco-tourism, as well as tackling some serious environmental issues. On March 31, 2015 the Costa Rican government announced that 100% of their electricity comes from renewable energy sources. It is also well on its way to becoming the first carbon-free economy in the world.

Costa Rica has also gathered a great deal of support to clean up their waterways, mainly because they have had to—they lay claim to having the dirtiest river in Central America. The Tarcoles River has a mangrove that is valuable to the richness of Costa Rica’s biodiversity but it is also called the “wheel river” because of the enormous amount of tire waste that has been lying around and floating in the river. The river, and the area surrounding it, serves as a refugee for 300 species of birds including hawks and eagles, and terrestrial animals such as crocodiles, green crabs and monkeys.

Both Costa Rica and Panama are serious about living green and while Costa Rica has dedicated 25% of its total area to parkland, Panama has claimed 29% as parkland. With over 10,000 species of native plants, 1,500 types of trees, more than a thousand species of birds and miles of vulnerable coral reef habitats, wildlife conservation is taken extremely seriously in Panama.


I couldn’t live without the internet and I often long desperately for the rapid fire connection I learned to live with in Australia. I know Panama is growing rapidly and I have watched as the internet has improved greatly over just the last year. I am more than grateful that due to the long-standing US military presence, Panama is one of the most connected countries in Latin America. Broadband is available in most cities and there are lots of free Wi-Fi hotspots nationwide.

But, not everyone wants to be connected. Costa Rica gets 2.1 megabytes per second and for many, who just want to check email, that’s more than enough. It wouldn’t be for me. Costa Rica is working hard on improving their connectivity, but due in large part to its role as the financial center of Central America, Panama has been able to upgrade faster.

Window Of Opportunity

In many ways, Panama is twenty years behind Costa Rica when it comes to luring expats. According to USA Today:

“When North American retirees began to get tired of the overcrowded expat communities and rising costs of Mexico, they turned to Costa Rica. Now that Costa Rica has reached mega-expat status, people are looking to Panama. Costs are still lower and there is much more capacity for growth. In addition to those factors, the Panamanian government is and has been placing heavy emphasis on tourism investment, largely in the form of tax incentives. It’s also possible for foreign residents to obtain financing in Panama, something they can’t get in Costa Rica.”

A Personal Choice

The options are staggering and which country is better is a personal choice. My strongest suggestion is that you ask yourself what is important to you individually. Really think about things. Is it living green, internet connectivity, rain forest or beach, happy people or healthcare? Both Costa Rica and Panama offer an amazing array of possibilities.

[thrive_text_block color=”light” headline=””]In case you’re a hawk-eye and catch the dates in the comments section below. This article was originally published December ’13 and updated in its entirety June ’15. [/thrive_text_block]

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