Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Throughout the last decade, Paraguay has been one of the fastest growing economies in Latin America. Over the last fifteen years, the economy grew by an average of 3.9 percent per year, handily outpacing much larger countries in the region. Driven mostly by a rise in exports of agricultural commodities, shipments of soy, cereals, and meat now account for almost a quarter of Paraguay’s economic output and more than 69 percent of its total exports. Despite this growth, high poverty, inequality, and rampant corruption remain major challenges.
For 2021, the Central Bank of Paraguay (BCP, in Spanish) forecast GDP growth of 3.5 percent, an optimistic rebound effect after the negative impact of the COVID-19 pandemic. The slow rollout of vaccines remains a factor of economic uncertainty and could impact this forecasted growth.
U.S.-Paraguay bilateral goods trade was $1.5 billion in 2020, a 37 percent decrease compared to 2019. U.S. goods exports to Paraguay were $1.3 billion, down 38 percent ($800 million) from the previous year. Corresponding U.S. imports from Paraguay were $150 million, down 7.4 percent. Paraguay was the United States’ 69th largest goods export market in 2020. U.S. exports included machinery, mineral fuels, toys, sports equipment, and optical and medical instruments. Imports from Paraguay were primarily sugar, oil seeds, precious metal and stone, wood, and products of animal origin. The U.S. goods trade surplus with Paraguay was $1.1 billion in 2020, a 45 percent decrease ($900 million) from 2019.
Foreign Direct Investment (FDI) flows to Paraguay remain weak compared to FDI among its neighbors. Total FDI (stock) in the country is currently estimated at $6.31 billion (Central Bank of Paraguay). The United States is the largest foreign investor in Paraguay, followed by Brazil, Spain, the Netherlands, and Chile. U.S. FDI in Paraguay (stock) was $1.35 billion in 2019 (latest data available from the Central Bank of Paraguay), a 6.7 percent increase from 2018.
Paraguay held $10.1 billion in foreign exchange reserves as of June 2020. The country’s debt-to-GDP ratio is 32 percent as of end of 2019 (up from 22.3 percent as a result of the COVID-19 pandemic). Inflation was 2.2 percent in 2020.
The service sector, including restaurants and hotels, transportation, financing, and retail, accounted for 48.3 percent of GDP. Agriculture, forestry, fishing, mining and cattle ranching created 11 percent of the wealth, with industry constituting another 18.5 percent. Construction, water and electricity accounted for 15.2 percent, and taxes on products the final 7 percent of GDP.
Raw agriculture commodities accounted for 35.5 percent of the $8.5 billion in exports in 2020. Total exports of agricultural goods accounted for 68.3 percent of total exports in 2020. Paraguay is the world’s largest exporter of organic sugar, second-largest producer and exporter of stevia, fifth-largest soy producer, and ninth-largest beef exporter by volume.
Paraguay’s large pool of young workers—47 percent of Paraguay’s population is 25 or under, and 29 percent is 15 or under— is an untapped resource and favors labor-intensive industry sectors.