(Updates with fresh voter quote, color) By Christine Murray and Elida Moreno PANAMA CITY, May 4 (Reuters) - Panama's presidential election on Sunday is expected to be the closest in decades, as the opposition battles to deny outgoing President Ricardo Martinelli a chance to keep an indirect hold over the booming Central American economy. Recent polls show the leading three candidates within a few points of one another in a race that pits the current administration, which oversaw a multi-billion dollar public works drive, against challengers from both the left and right. The winner will inherit oversight of a major expansion of the Panama Canal, which briefly stalled earlier this year after a row over costs between the canal and the building consortium. Still, the campaign has focused more on personalities than government policy, which is not expected to change dramatically regardless of who emerges as the winner. A banking and trading hub, Panama is best known for the canal that links the Atlantic and Pacific Oceans. Accounting directly for 8 percent of gross domestic product, it has helped fuel the fastest growth in Latin America in the last few years. Maintaining that performance will be a big challenge for the next president. The 62-year-old Martinelli backs former businessman and housing minister Jose Domingo Arias of the ruling Democratic Change (CD) party. Arias told a packed closing rally on Thursday: "You can choose between the representatives of old politics, who always governed for their own privilege, or for those from new politics who can take the country even further." Seen by opponents as a proxy for Martinelli, whom the constitution bars from running again in 2014, Arias' running mate is the president's wife, Marta Linares de Martinelli. She has no formal political experience, but Arias has dismissed suggestions she is not up to the job. An Arias win would make his party the first to gain re-election since a U.S. invasion in 1989 to oust military strongman Manuel Noriega, who has been behind bars ever since. Running neck-and-neck with Arias is moderate leftist challenger Juan Carlos Navarro of the Democratic Revolutionary Party (PRD), a former mayor of Panama City. Navarro is vowing to improve government transparency after Martinelli had to fend off allegations that the infrastructure contracts he handed out were tainted by corruption. Just behind in third is the Panamenista Party's Juan Carlos Varela, the center-right vice-president. He helped Martinelli to win the presidency in 2009, but the two later fell out. Leaning out of the window of a dilapidated building in a poor part of the historic quarter of Panama City, where voting got off to a slow start, Dimas Cedeno is rooting for Varela. "I think he is honest, not like others like President Martinelli, who wants to install his colleague Arias so he can remain in power," Cedeno said. At up to $624 a month, the minimum wage in Panama is among the highest in Latin America, but the quarter of the population that lives in poverty is feeling the bite of nagging inflation. The discontent has led to a nationwide construction strike over pay since April 25. That has halted thousands of projects, including work on the canal expansion, much to the annoyance of Martinelli, who is president until July 1. (Additional reporting by Noe Torres; Editing by Simon Gardner and Stephen Powell)
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