Which Central American country is famous for its canal?

The country famous for its canal is Panama, known primarily for the Panama Canal, which is a significant engineering feat that connects the Atlantic and Pacific Oceans. The canal greatly facilitates international maritime trade by allowing ships to shorten the journey around the southern tip of South America. Completed in 1914, the Panama Canal has had a profound impact on global trade patterns and remains a vital shipping route today.

While Nicaragua has also considered building a canal, it has not been completed or operational in the same way as the Panama Canal. Guatemala and Belize, on the other hand, are well-regarded for their rich cultural heritage and natural beauty but do not have a canal akin to Panama's. Therefore, Panama stands out as the correct answer to this question.