PANAMA CITY -- Along this capital's main boulevards, the talk these days is of a Panamanian "economic miracle."

"Best year I've had in a long time," said a boutique owner. "I'm buying my wife a BMW."

But the miracle, it seems, travels slowly. In Colon, the seamy port on Panama's Atlantic coast, Edith Torres sells lottery tickets, earning, she says, $20 a month to rear a 9-year-old son and 2-month-old daughter. "At times, we have enough to eat," she says.

For Panama's ravi blancos, or white tails -- the fair-skinned elite who dominate this country's government and commerce -- the economy is booming. Most of the shops and stores looted after last December's U.S. invasion here are reopened, restocked and rebounding.

At swanky restaurants and in the lobbies of international hotels, the table talk is studded with anecdotal evidence of the boom: A family-owned concrete-mixing company has ordered five new trucks to keep up with demand. A radio station owner says his advertising revenues increase by 25 percent each month. Small-business advertising in the daily La Prensa newspaper has ballooned from a page or two a year ago to as many as 20 pages.

But the ripples of the ravi blanco recovery are barely reaching the 40 percent of Panama's 2.2 million people who live in poverty. At least one in five Panamanians has no work, and that sustains high rates of crime and drug addiction. Personal incomes, having nosedived in 1987-89, are recovering slowly.

"The optimism we have is fantastic. We do believe it's a miracle," said Ricardo Aleman, the bullish president of Panama's chamber of commerce. But he added: "It's impossible that in just nine months" since the U.S. invasion to oust general Manuel Noriega "the benefits would be enjoyed by everybody. Unemployment is our biggest problem."

In the provincial town of Santiago, 130 miles west of Panama City, Generoso Enrique Ferrabone presides over a construction materials business that has sold three-quarters of its floor space to other businesses in the last two years. In the 30 years since he started the company, he said, things have never been so bad.

"We're barely breathing," he said. "Yeah, we think things are going to get better -- because they can hardly get any worse!"

Panama has long enjoyed economic advantages as an intercontinental crossroads. Buoyed by the canal, secretive banks, ship registry and the world's largest duty-free zone after Hong Kong, the country developed what most of its Central American neighbors lacked: a sizable, stable middle class.

But the economy was ravaged by two years of U.S. sanctions, also aimed at toppling Noriega, as well as an inefficient, often corrupt bureaucracy that quadrupled to 152,000 public workers from 1968 to 1988. As the bureaucracy swelled, so did Panama's debt to international lenders, which now stands at $7 billion.

In the final years of Noriega's government, billions of dollars in foreign deposits were pulled out of the country's banks. Internal deposits shrank by hundreds of millions of dollars before Noriega froze all bank accounts. With that, confidence in Panama's future evaporated. The economy is estimated to have lost nearly a third of its value between 1987 and last December, when U.S. troops arrived.

The new government of President Guillermo Endara has braked the slide, restoring the banking system and presiding over a recovery that is expected to produce about 7 percent growth this year.

More than $1 billion in deposits have returned to the banks -- a move described by some as a sign of hope and growing confidence, and by others as an indication of booming drug profits being laundered through Panama.

Endara is praised for appointing honest civil servants to fill posts that formerly were clearing houses for graft, like the directors for customs and public works. Ostentatious money-making rackets are no longer officially sanctioned.

Vice President Guillermo Ford, who is in charge of the economic program, has called for trimming of the bureaucracy, reining in of unions and selling of government-owned enterprises.

Controller General Ruben Carles has also proposed cuts in government spending, in part to find money to cover Endara's promise to protect people from bearing the full brunt of soaring oil prices caused by the Persian Gulf crisis.

The government hopes the poor will be compensated for cuts in spending for social programs by new jobs in a revived private sector. Despite the squeeze on the nation's have-nots, international lenders and the United States have cheered the plan as a bitter pill that will cure in the long term.

Nonetheless, there is widespread criticism that cronyism and nepotism are still alive and well in Endara's government. Panama City Mayor Guillermo Cochez wrote in La Prensa, "It is a government that is only concerned with putting relatives and friends in power and letting them do whatever they want."

Soon after the U.S. invasion, President Bush pledged aid to help Panama jump-start its economy. About $48 million in emergency assistance was allocated almost immediately, and about $30 million of that has been used already to house and feed the more than 3,000 Panamanians who lost their homes during the invasion when the Panama City neighborhood known as El Chorillo burned. The money has also provided temporary public works jobs and short-term credit to small businesses.

But of the remainder of the $461.4 million in aid approved by Congress, only about $40 million has been spent -- and most of that has gone to banks, which have not yet lent the money to revitalize businesses.

Part of the aid is hinged on Panama undertaking economic reforms. Some $30 million is linked to the legislature passing Ford's economic plan, for example. However, another $84 million is tied up in a dispute between Washington and the Endara government over efforts to track drug barons and other criminals who are involved in substantial financial transactions.

A proposed Mutual Legal Aid Agreement would pry open Panama's secretive rules for banking and financial information to allow federal prosecutors access to information on flows of cash and securities in Panama.

U.S. officials point out that the agreement would afford the same privileges to Panamanian authorities for pursuing information in the United States. But hardly anyone in Panama takes that argument seriously. "Panama has no ability to go after Manufacturers Hanover in New York to get somebody," said Aleman, the chamber of commerce president.

Panamanians worry that the country's service economy, particularly its banks, would lose major customers if they knew the United States had access to certain financial records.

"We don't want to protect drug dealers," said Aleman. "But we do depend on the banking system. The agreement as it's written now is too broad. It will cripple our economy. If it goes through," the Drug Enforcement Administration "and Treasury might as well open up branch offices here."

U.S. Ambassador Deane R. Hinton dismisses such reservations. The Panamanian government, he said in an interview, "has no desire to conceal criminal activities." He said the main problem to be resolved is the U.S. position that Panama should provide information on investigations that do not count as crimes under Panamanian law, such as insider trading.

"I don't see what harm it does to Panama if we have an insider trader and ask them for information," he said. Hinton is bullish on Panama's long-term prospects for recovery, as are most foreign analysts.

But in Panama, it is the short term that worries people. The residents of El Chorrillo march to protest their lot. Unions are taking to the streets to protest plan to rewrite the labor code.

As the government trims the size of the bureaucracy, unemployment is likely to increase. And the effects of the U.S. aid package, intended as a jump-start for Panama's economy, will not be felt much before the middle of next year.

Said Jose Galan, a private economist: "For people in the streets, there's no miracle."