The official language in Panama is Spanish. English is widely spoken specially in the Caribbean Coastline. There are some indigenous tribes that still speak their own language but most of them speak Spanish, too.
Most hotel workers, tour guides and even some taxi drivers will speak English in response to the growing importance of tourism in the country, especially in the city of Panama and other important cities.
However, it may be helpful to know a little bit of Spanish if you are making a trip on your own since in the most remote parts of the country it’s difficult to find English-speaking locals.