Paraguay - Country Commercial Guide
Market Overview
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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 3.5 percent per year, handily outpacing much larger countries in the region.  This consistent growth decelerated from 2019 to 2022 due to prolonged drought, the COVID-19 pandemic, and the impact of the war in Ukraine on agricultural trade flows.  In 2023, the economy is expected to rebound as a result of increased agricultural output due to improved weather conditions.  Despite Paraguay’s reputation for macroeconomic discipline, it continues to struggle with high poverty, inequality, and rampant corruption.

In 2022, production of soy – Paraguay’s principal export commodity - fell by 60 percent due to severe drought.  This negative economic impact was offset by good performance in the services, manufacturing, power generation, and livestock sectors, resulting in GDP growth of 0.1 percent.   Motivated by good dynamics in the commerce, hospitality, real estate, information services, and government services sectors, the unemployment rate fell 1.1 percent to 5.7 percent in 2022.  According to the Paraguayan National Institute of Statistics (INE, in Spanish), the poverty rate is estimated to have fallen by 2.2 percent since 2021 reaching 24.7 percent of the population.  U.S.-Paraguay bilateral goods trade was $2.4 billion in 2022, a 6.6 percent increase compared to 2021.  U.S. goods exports to Paraguay were $2.1 billion, up 3.2 percent ($66 million) from the previous year.  Corresponding U.S. imports from Paraguay were $270 million, up 43.6 percent.  Paraguay was the United States’ 67th largest goods export market in 2022.  U.S. exports included computer and electronic products, chemicals, petroleum and coal products, machinery, and transportation equipment.  Imports from Paraguay were primarily products of animal origin, processed foods, agricultural products (oil seeds, grain, and sugar), wood products, and transportation equipment.  The U.S. goods trade surplus with Paraguay was $1.9 billion in 2022, a 0.9 percent decrease ($16 million) from 2021.

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 $7.05 billion by the Central Bank of Paraguay).  The United States is the second largest foreign investor in Paraguay ($892 million) just below Brazil ($904 million), followed by the Netherlands ($779 million), Spain ($589 million), and Chile ($536 million).  Paraguay held $10.2 billion in foreign exchange reserves as of July 2023.  The country’s debt-to-GDP ratio is 36.3 percent as of end of 2022 (up from 22.4 percent, as a result of the COVID-19 pandemic).  Inflation was 8.1 percent in 2022. 

In 2022, 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 11.3 percent of the wealth, with industry constituting another 19.4 percent.  Construction, water, and electricity accounted for 13.8 percent, and taxes on products the final 7.1 percent of GDP.

Raw agriculture commodities accounted for 30.1 percent of the $9.95 billion in exports in 2022.  Total exports of agricultural goods accounted for 67.7 percent of total exports in 2022.  Paraguay is the world’s largest exporter of renewable energy, second-largest producer of stevia, third-largest exporter of soy and yerba mate, fourth-largest exporter of corn and chia, sixth-largest exporter of soybean oil, and eight-largest beef exporter by volume.

Paraguay’s large pool of young workers—46 percent of Paraguay’s population is 25 or under, and 28 percent is 15 or under— is an untapped resource and favors labor-intensive industry sectors.

Political Environment

For background information on the political and economic environment of the country, please click on the link to the U.S. Department of State Countries & Areas website.