Construction boomed in the 1970s as a result of government spending on infrastructure and housing. In the early 1980s, with the building of the trans-isthmian oil pipeline and the Edwin Fábrega Dam and associated hydroelectric plant, construction continued to grow, from US$124.3 million in 1980 to US$154.7 million in 1982. Construction fell dramatically in 1983 to US$106.4 million, when the government cut expenditures, and continued to decline in 1984 (US$94.4 million) and 1985 (US$93.4 million). In 1986 the decline was finally reversed, as the sector registered 5 percent growth, generated primarily by private residential building. Thus, the structural adjustment program of 1983 and 1984 achieved its goal of shifting construction activity from the public to the private sector. Nonetheless, the state continued to play a significant role in construction. The government planned to build 2,500 houses and service facilities for low-income families in Panama City. The construction sector benefited from liberal tax incentives, which included preferential interest rates on mortgages and exemption from capital gains tax on sales of urban real estate through 1988. In the immediate aftermath of the political turmoil of mid-1987, the rate of construction lowered dramatically as credit available to the private sector declined.

Data as of December 1987