Economy of Paraguay

Economy of Paraguay

The economy of Paraguay is marked by the dominance of the farming, commercial and service sectors. Industry, however, is less well developed, and mostly based on the processing of agricultural goods.

The commercial sector is supported by shopping tourism proceeding from Brazil and Argentina, as several imported products are cheaper than in these neighboring countries.

Paraguay figures as a MERCOSUR foundation member.

tructure of the economy

The most important component of the Paraguayan economy is the farming sector, which contributed 27% to GDP in 2006. The participation of commerce was 20.2%, and that of other services, including government, 38.4%. Industry’s part (including mining and construction) was about 20%.

After years of economic crisis, between 1999 and 2002, the Paraguayan economy grew at between 2.9 and 4.1% per year from 2003 to 2006. For 2007, the estimated growth is about 6.4%. Inflation in 2007 reached 6.0%.

Most enterprises are small, micro and individual ones, including subsistence jobs like street vendors. Only 4% of the Paraguayan labor force works in companies with more than 50 employees.

In June 2007 external foreign exchange reserves amounted to US$ 2153 billion, and the foreign official debt US$ 2154 billion, close to parity.

Fiscal surplus is provisionally reported as 0.5% of GDP in 2006 and 2007.

Agriculture and livestock

Traditionally, the Paraguayan economy is based on cattle livestock and the cultivation of manioc, sugar cane, cotton, soy and yerba mate. During the last years, soy has become the principal product of Paraguayan agriculture, and the main export product of the country. The increase of soy production contributed to important structural changes in the rural zones of Paraguay, such as the reduction of agricultural jobs and the greater mechanization of cultivating processes.

At the same time, products like fruits, wheat and organic sugar reached external markets and contributed to a higher diversification of the Paraguayan primary sector.

The livestock sector prospered after the closing of the markets to other meat producing countries following outbreaks of foot and mouth disease, while Paraguay remained free of it. More recently, Argentina and Brazil have recovered their markets, increasing competition for the Paraguayan meat sector.

Timber production in Paraguay was reduced by the disappearance of wide tracts of the original forests, but sustainable wood cultivation is now on the increase.


Paraguay has few mineral resources. The principal exploitations are of lime for the construction and cement industry. There are some gas and oil resources in the northern Chaco region, which have not yet been exploited.


Traditionally the industrial sector of Paraguay depends on agriculture (e.g. bakeries, processing of drinks, tannery and cabinetmaking). Other important industries include textiles, leatherwear, footwear, ceramics and construction materials.

In recent years several new industries have sprung up, such as pharmaceutical production, motorcycle assembly and electrical machines.

The Maquila System, which was established in 1997 and allows the establishment of export-oriented industrial production at low tax cost, became important after 2004, with several national and international factories operating under this system.

Electrical energy

The nation's electrical energy consumption is covered virtually 100% by the hydroelectric dams of Itaipu, Yacyreta and Acaray, which is the oldest and smallest of these three plants. Most of the energy produced by Itaipu is sold to Brazil, just as Yacyreta energy is sold to Argentina.

External trade

The most important export products of Paraguay are soybeans, meat, corn, animal feed, and vegetable oils. In return, Paraguay imports industrial goods such as machines, electrical products, vehicles and chemical products. Petroleum is also a major import commodity for the country. Uruguay, Brazil and Russia are the main export markets for Paraguay, while the most important suppliers are China and Brazil. In 2007, exports totaled US$ 3.4 billion, and imports US$ 6.2 billion.

Stock market

The most important and only stock exchange in Paraguay is the Bolsa de Valores y Productos de Asunción.

Informal sector

Traditionally, the informal sector forms an important part of the Paraguayan economy. In particular, this sector achieved high turnovers via the informal import and re-export of several goods, like electric appliances, tobaccos, whiskies, etc. During recent years this business has been under pressure from increased vigilance on the part of the Brazilian customs authorities as well as by the Paraguayan government's efforts to achieve higher tax revenues.

Non-registered individual workers and vendors still form an important part of the Paraguayan labor force.


The Paraguayan road network includes almost 4,500 kilometers of paved roads and nearly 60,000 kilometers of secondary roads. The density of the road network is higher in the oriental region, and lower in the Chaco area. However, in 2007 a paved connection to the Bolivian border was completed across the Chaco region.

The Paraguay-Paraná waterway constitutes an essential route for the transport of exported and imported goods.

The railway which connects Asunción to Encarnación actually doesn’t operate, but there is still a connection between Encarnación and Posadas (Argentina) for the transport of agricultural goods.

Paraguay has two international airports, Silvio Pettirossi International Airport, in Asunción, and Guarani International Airport, in Ciudad del Este, and several secondary airports in other parts of the country.

Media and Communications

There are five national newspapers and a larger number of local publications. There are five Paraguayan TV stations. Additionally, essential international stations can be received by cable in the main urban areas.

The fixed line network is controlled by the state-owned COPACO Company. The cell phone network is open to private operators. There are four competing mobile phone operators in Paraguay. During the last few years mobile phone coverage of the population has been far more extensive than fixed line coverage.


GDP (purchasing power parity):$30.9 billion (2005 est.)

GDP (official exchange rate):$7.586 billion (2005 est.)

GDP - real growth rate:3.3% (2005 est.)

GDP - per capita:purchasing power parity - $4,900 (2005 est.)

GDP - composition by sector:
*"agriculture:" 27.5%
*"industry:" 24%
*"services:" 48.5% (2005 est.)

Labor force:2.68 million (2005 est.)

Labor force - by occupation:agriculture 45%

Unemployment rate:16% (2005 est.)

Population below poverty line:32% (2005 est.)

Household income or consumption by percentage share:
*"lowest 10%:" 0.5%
*"highest 10%:" 43.8% (1998)

Distribution of family income - Gini index:56.8 (1999)

Inflation rate (consumer prices):7.5% (2005 est.)

Investment (gross fixed):20.1% of GDP (2005 est.)

*"revenues:" $1.334 billion
*"expenditures:" $1.37 billion, including capital expenditures of $700 million (2005 est.)

Public debt:36.1% of GDP (2005 est.)

Agriculture - products:cotton, sugarcane, soybeans, corn, wheat, tobacco, cassava (tapioca), fruits, vegetables; beef, pork, eggs, milk; timber

Industries:sugar, cement, textiles, beverages, wood products, steel, metallurgic, electric power

Industrial production growth rate:0% (2000 est.)

*"production:" 51.29 billion kWh (2003)
*"consumption:" 3.528 billion kWh (2003)
*"exports:" 44.17 billion kWh (2003)
*"imports:" 0 kWh (2003)

Electricity - production by source:
*"fossil" fuel: 0%
*"hydro:" 99.9%
*"nuclear:" 0%
*"other:" 0.1% (2001)

*"production:" 0 bbl/day (2003 est.)
*"consumption:" 25,000 bbl/day (2003 est.)
*"exports:" NA (2001)
*"imports:" NA (2001)

Current account balance:$-170 million (2005 est.)

Exports:$3.13 billion f.o.b. (2005 est.)

Exports - partners:Uruguay 27.8%, Brazil 19.2%, Argentina 6.3%, Switzerland 4.1% (2004)

Imports:$3.832 billion f.o.b. (2005 est.)

Imports - partners:Brazil 30.9%, Argentina 23.3%, China 16.6%, US 4% (2004)

Reserves of foreign exchange and gold:$1.293 billion (2005 est.)

Debt - external:$3.535 billion (2005 est.)

Economic aid - recipient:NA

Currency:1 Guarani (G) = 100 centimos

Exchange rates:guarani (G) per US$ - 6,158.47 (2005), 5,974.6 (2004), 6,424.34 (2003), 5,716.26 (2002), 4,105.92 (2001), 3,332.0 (January 2000), 3,119.1 (1999), 2,726.5 (1998), 2,177.9 (1997), 2,056.8 (1996), 1,963.0 (1995); note - since early 1998, the exchange rate has operated as a managed float; prior to that, the exchange rate was determined freely in the market

Fiscal year:calendar year

ee also


External links

* [ CIA - The World Factbook -- Paraguay]
* [ Central Bank of Paraguay]
* [ Ministry of Finance]
* [ Ministry of Industry and Commerce]

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