When you cross the border between Costa Rica and Panama, you will notice a distinct change in dialect. True to its Caribbean orientation, Panamanian Spanish is much closer to Puerto Rican than to Tico or Nicaraguan. For students with Mexican or European Spanish, this may take some getting used to. However, it is very easy to understand and not at all more difficult than that of other Spanish-speaking countries. Panamanians tend to pronounce the “h” instead of the “s” and not pronounce certain Ds at the end of certain words. This is part of their dialect, but Panamanians are quite capable of speaking Spanish in a way that is more understandable to students of Mexican or Castilian Spanish, and they are aware of their regional peculiarities.
Panama City has a different dialect in which they mix English and Spanish words. Although educated Panamanians try to speak proper Spanish, they are very proud of their dialect and prefer to use it unless it is a formal conversation or public speech.
Panama has much more indigenous culture than some neighbouring countries. In Kuna Yalay you will hear the indigenous Kuna language spoken. In the Comarca Ngöbe-Buglé, as in Chiriqui or Bocas del Toro, you can hear the indigenous Ngöbe-Buglé (Guaymí) language, although the Ngöbe and Buglé are very quiet with foreigners. If you ask one of them for directions, he will probably point you in the right direction with a wave of his hand or his lips.
Much of Panama’s Caribbean coast was settled by people from Jamaica and Barbados. In more recent times, the descendants of these settlers seem to speak more Spanish, but many still speak English, albeit a very Caribbean variety called Guari Guari.
Until a few years ago, the canal was controlled by the United States. The United States gave the canal back to Panama, but many people in Panama City and other areas near the canal still speak English as their first or second language. Surprisingly, English is not as widely spoken as one might think, considering how much time Americans have spent in the country. It’s not that common for people who work in shops or are on the street to speak English. There are a number of news sites and blogs in English to help you with your travels.