Few cities in Latin America can match the diversity, cosmopolitanism and sheer energy of PANAMA? CITY : polyglot and post-modern before its time, in many ways it is closer in atmosphere to the mighty trading cities of Asia - Hong Kong or Singapore - than to anywhere else in the region. Situated on one of the great crossroads of the world, the city has always thrived on commerce, and its unique geographical position and the opportunities it presents have attracted immigrants from all over the globe. Though it is the undisputed political and social centre of PanamA? and home to almost half its population, PanamA? City's gaze is fixed firmly on the outside world, and its inhabitants pay scant attention to what they refer to rather vaguely as "the interior". Open-minded and outward looking, the population is among the sharpest and most sophisticated in Central America.

With a spectacular setting on the Pacific bay of the same name, with the canal on one side and lush, forested mountains rising behind, PanamA? City encompasses some startling incongruities. On the southwest end of the bay stands the old city centre of San Felipe , a jumble of crumbling colonial churches and nineteenth-century mansions, while 4km or so to the northeast rise the shimmering skyscrapers of El Cangrejo , the modern banking and commercial district. Further east, amid the sprawling suburbs, stand the ruins of PanamA? Viejo , the first European city to be founded on the Pacific coast of the Americas, while west of San Felipe the former US Canal Zone town of Balboa retains a distinctly North American character despite having been returned to Panamanian control in 1979.

Those who find the city's ceaseless commercial energy overwhelming, meanwhile, can easily escape: to Isla Taboga , the idyllic "island of flowers" some 20km off the coast; along the Amador Causeway that juts out into the Pacific beside the canal; or into the Parque Nacional Metropolitano , the only pristine tropical rainforest within the limits of a Latin American capital. PanamA? City is also a good base from which to explore the rest of the country - the canal, ColA?n and the Caribbean coast as far as Portobelo can all be visited on day-trips.