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Economy of Paraguay
 
 
 

General

Paraguay has a market economy characterised by a large informal sector. Agriculture dominates the economy, but unequal land distribution has resulted in a large class of peasant farm labourers. A large portion of the population is uninvolved in the formal economy, instead existing as subsistence farmers. In recent years, the economy has grown as a result of increased agricultural exports, especially soy beans. Reforms in fiscal and monetary policy also have improved Paraguay’s economy. Inflation has dropped, and the currency has appreciated gradually. Nevertheless, urban unemployment and underemployment have been problems throughout Paraguay’s history. Paraguay has the economic advantages of a young population and vast hydroelectric power but has few mineral resources, and political instability has undercut some of the economic advantages present. The government welcomes foreign investment.

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%. The economy grew rapidly between 2003 and 2008 as growing world demand for commodities combined with high prices and favourable weather to support Paraguay's commodity-based export expansion. Paraguay is the 6th largest soy producer in the world. Drought hit in 2008, reducing agricultural exports and slowing the economy even before the onset of the global recession. In 2010, Paraguay experienced the greatest economical expansion of the zone and the highest of South America, with a GDP growth rate of 14,5% for by the end of the year.

Unlike many South American countries, Paraguay has few mineral resources and very little history of mining success. Foreign companies have explored Paraguay in recent years, searching for overlooked mineral deposits. Small extraction projects exist, seeking lime, clay, and the raw materials necessary to make cement, but the country’s iron and steel manufacturers must import raw materials from neighbouring countries.

Paraguay has no oil reserves; it relies on imported oil to meet its limited need for oil-produced energy. The Paraguayan government owns Petróleos Paraguayos, which is responsible for all distribution of oil products. The state accepts bids from international oil companies, selecting a few companies annually to meet the country’s demand. Presently, Paraguay does not produce or consume natural gas, but consumes LPG imported mainly from Argentina.

Paraguay relies almost solely on hydroelectric power to meet its energy needs. The Itaipú Dam, completed in 1984, has the world’s second largest power-generating capacity.

Paraguay has a small tourism industry. Total tourism receipts declined annually from 2000 through 2002. In 2003 Paraguay’s hotel occupancy rate was 38%. It increased by 15% in 2004. Small gains in tourism have come from business rather than leisure travellers.

Paraguay is a member of the Common Market of the South (Mercado Común del Sur or Mercosur). Most of Paraguay’s trade takes place with neighbours Brazil and Argentina. Paraguay is also a member of the Inter-American Development Bank, Latin American Integration Association, and Latin American Economic System and a signatory to the agreement creating the South American Community of Nations. In 2004 Paraguay signed an energy cooperation agreement with Venezuela to purchase oil and petroleum. Venezuela agreed to concessional financing that allowed Paraguay to pay over a 15-year period at a nominal interest rate.

Overview

Economy - overview : Landlocked Paraguay has a market economy distinguished by a large informal sector, featuring re-export of imported consumer goods to neighbouring countries, as well as the activities of thousands of micro-enterprises and urban street vendors. A large percentage of the population, especially in rural areas, derives its living from agricultural activity, often on a subsistence basis. Because of the importance of the informal sector, accurate economic measures are difficult to obtain. On a per capita basis, real income has stagnated at 1980 levels. The economy grew rapidly between 2003 and 2008 as growing world demand for commodities combined with high prices and favourable weather to support Paraguay's commodity-based export expansion. Paraguay is the sixth largest soy producer in the world. Drought hit in 2008, reducing agricultural exports and slowing the economy even before the onset of the global recession. The economy fell 3.8% in 2009, as lower world demand and commodity prices caused exports to contract. The government reacted by introducing fiscal and monetary stimulus packages. Growth resumed at a 13% level in 2010, the highest in South America, but slowed in 2011-12 as the stimulus subsided and severe drought and outbreaks of foot-and-mouth disease led to a drop in beef and other agricultural exports. The economy took another leap in 2013, largely due to strong export growth. Political uncertainty, corruption, limited progress on structural reform, and deficient infrastructure are the main obstacles to long-term growth.
GDP (purchasing power parity) : $45.9 billion (2013 est.)
GDP (official exchange rate) : $30.56 billion (2013 est.)
GDP - real growth rate : 12% (2013 est.)
GDP - per capita (PPP) : $6,800 (2013 est.)
GDP - composition, by end use : household consumption: 67.1%

government consumption: 12.8%

investment in fixed capital: 16.9%

investment in inventories: 0.4%

exports of goods and services: 52.1%

imports of goods and services: -49.4% (2013 est.)
GDP - composition by sector : agriculture: 20.4%

industry: 17.7%

services: 61.9% (2013 est.)
Labour force : 3.19 million (2013 est.)
Labour force - by occupation : agriculture: 26.5%

industry: 18.5%

services: 55% (2008)
Unemployment rate : 6.6% (2013 est.)
Population below poverty line : 34.7% (2010 est.)
Household income or consumption by percentage share : lowest 10%: 1%

highest 10%: 41.1% (2010 est.)
Distribution of family income - Gini index : 53.2 (2009)
Budget : revenues: $5.788 billion

expenditures: $6.287 billion (2013 est.)
Taxes and other revenues : 18.9% of GDP (2013 est.)
Budget surplus (+) or deficit (-) : -1.6% of GDP (2013 est.)
Public debt : 15.7% of GDP (2013 est.)
Inflation rate (consumer prices) : 2.3% (2013 est.)
Commercial bank prime lending rate : 28.9% (31 December 2013 est.)
Stock of narrow money : $4.364 billion (31 December 2013 est.)
Stock of broad money : $8.215 billion (31 December 2013 est.)
Stock of domestic credit : $11 billion (31 December 2013 est.)
Market value of publicly traded shares : $962.3 million (31 December 2012 est.)
Agriculture - products : cotton, sugar cane, soy beans, 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 : 5.6% (2013 est.)
Electricity - production : 53.53 billion kWh (2010 est.)
Electricity - consumption : 6.778 billion kWh (2010 est.)
Electricity - exports : 46.12 billion kWh (2011 est.)
Electricity - imports : 0 kWh (2012 est.)
Crude Oil - production : 2,000 bbl/day (2012 est.)
Crude Oil - exports : 0 bbl/day (2010 est.)
Crude Oil - imports : 0 bbl/day (2010 est.)
Crude Oil - proved reserves : 0 bbl (1 January 2013 est.)
Refined petroleum products - production : 0 bbl/day (2010 est.)
Refined petroleum products - consumption : 26,820 bbl/day (2011 est.)
Refined petroleum products - exports : 0 bbl/day (2010 est.)
Refined petroleum products - imports : 31,290 bbl/day (2010 est.)
Natural gas - production : 0 cu m (2011 est.)
Natural gas - consumption : 0 cu m (2011 est.)
Natural gas - exports : 0 cu m (2011 est.)
Natural gas - imports : 0 cu m (2011 est.)
Natural gas - proved reserves : 0 cu m (1 January 2013 est.)
Current account balance : $1.376 billion (2013 est.)
Exports : $14.7 billion (2013 est.)
Exports - commodities : soy beans, feed, cotton, meat, edible oils, wood, leather
Exports - partners : Uruguay 17.7%, Brazil 16.4%, Argentina 15.6%, Russia 12% (2012)
Imports : $12.37 billion (2013 est.)
Imports - commodities : road vehicles, consumer goods, tobacco, petroleum products, electrical machinery, tractors, chemicals, vehicle parts
Imports - partners : Brazil 24.2%, China 19.5%, Argentina 18.3%, US 11.5% (2012)
Reserves of foreign exchange and gold : $6.336 billion (31 December 2013 est.)
Debt - external : $7.013 billion (31 December 2013 est.)
Stock of direct foreign investment - at home : $4.526 billion (31 December 2013 est.)
Stock of direct foreign investment - abroad : $213.6 million (31 December 2013 est.)
Exchange rates : guarani (PYG) per US dollar - 4,315.1 (2013 est.); 4,424.9 (2012 est.); 4,735.5 (2010 est.); 4,965.4 (2009); 4,337.7 (2008)
Fiscal year : calendar year

 
 

 

 
 

 



 


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