Tropical Storm Otto strengthened into a hurricane Tuesday in the Caribbean as it lurched toward Central America, causing three deaths in Panama and prompting coastal evacuations in Costa Rica and Nicaragua.

Otto became the seventh hurricane of the 2016 Atlantic season as it moved westward packing maximum sustained winds of 75 miles (120 kilometers) per hour, the US-based National Hurricane Center said.

The hurricane is expected to pick up strength and speed as it approaches the coasts of Costa Rica and Nicaragua before making landfall, the NHC said in a 2100 GMT bulletin.

Currently, hurricane-force winds were extending up to 10 miles from the center.

Otto's rains "will likely result in life-threatening flash floods and mud slides," while "life-threatening surf and rip-current conditions" will be experienced along the coasts of Panama, Costa Rica and Nicaragua, the US center warned.

In Panama, two people died from a mudslide and one was killed by a falling tree at the onset of Otto's heavy rain, the head of the National Civil Protection Service, Jose Donderis, told AFP.

Nine people were caught in the mudslide that occurred west of the capital. "Seven were rescued and unfortunately two deceased people were recovered," he said.

The other death was that of a boy who was hit by a tree that fell on the car he was in while waiting with his mother outside his school in the capital, Donderis said. The mother survived.

Officials in the country ordered all schools closed. Government workers were told to leave offices hours early on Wednesday.

- Evacuations -

Neighboring Costa Rica on Tuesday ordered the evacuation of more than 4,000 people along the sparsely inhabited northern part of its Caribbean coast to avoid fatalities.

"We will not allow people to remain in at-risk areas and loss of human life," President Luis Guillermo Solis told a news conference.

The order did not extend to Costa Rica's principal port city of Limon on the southern Caribbean coast. The city, home to around 60,000 people, is projected to feel the glancing force of the hurricane on Wednesday.

Nicaragua, the poorest country in Central America, has issued a national alert and also ordered coastal evacuations.

The co-director of the SINAPRED national disaster agency, Guillermo Gonzalez, said navy ships would evacuate people on Little Corn Island, a popular Nicaraguan tourist spot in the Caribbean, to shelters on bigger Corn Island.

Civilian Nicaraguan vessels at sea were ordered back to port.

The storm was expected to pass near Managua, Nicaragua's inland capital, on Thursday.

According to forecasts, Otto was to cut across the narrow Central American isthmus, losing strength as it went, before exiting out into the Pacific Ocean on Friday.

The storm was a late arrival in the Atlantic hurricane season, which typically runs from June to the end of November, and was hitting land unusually south. Costa Rica has not experienced a direct hit from a hurricane since records began in 1951.

A previous hurricane, Matthew, devastated parts of southern Haiti in early October, killing 546 people and leaving nearly 175,000 homeless.