You could live and have a social life in Panama just by knowing English, French, Portuguese, German or even Japanese as there are many expats living there from all over the world.
But learning a bit of Spanish is indispensable if you want to gain the full Panamanian experience. In addition, you will likely need a basic level of Spanish to travel around the country since away from Panama City very few people speak English.
As with many languages, the best way to learn Spanish is to become immersed in the language – don't be afraid of making mistakes as Panamanians are extremely friendly and willing to help you.
Make friends with Panamanians, and talk to them from your first day there. Communicate with as many people as you can, like your neighbours, the doorman, the cashier at the supermarket, taxi drivers and waiters with a big smile on your face. Panamanians will speak slowly, using their hands, and mixing with some English to help you.
Another free and effective way to learn Spanish is by reading newspapers, comics (like “Mafalda” of Quino), listening to the radio and watching television. Obviously, at the beginning you won’t understand much, but the more you listen and watch the quicker you will get familiarized with Spanish. Television has the advantage that you will become accustomed to Spanish sounds and pronunciation, and without realizing it you will find yourself picking up words and sentences – this is a non-tiring way to learn some grammar.
You could of course take some Spanish classes before or after arriving. In Panama, you will have many options for language courses. You could choose either intensive or part-time classes. You could also get private classes or join a group class to meet new people. As most of the classes are conducted exclusively in Spanish, you will improve much faster. Remember practice is the key, so even if you take classes, you should keep practising inside and outside of the classroom.
Here are some of the many language schools in Panama: