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.  This consistent growth decelerated from 2019 to 2022 due to extreme climate events, the COVID-19 pandemic and the war in Ukraine.  The drop in exports of agricultural commodities,  and the suspension of meat exports to Russia are the principal causes of the deceleration.  Although, Paraguay is one of the countries that has best coped with COVID-19 pandemic due to its macroeconomic discipline, it continues to struggle with  high poverty, inequality, and rampant corruption.

The Paraguayan economy recovered strongly in 2021, after two years of recession due to drought in 2019 and the COVID-19 pandemic in 2020. GDP grew by 4.2% in 2021, driven by strong investment growth fixed, both in private and public construction works, as well as by the growth of private consumption (World Bank on Paraguay) However, the increase in inflation in the second half of the year and the drought resulted in a small decrease in the average unemployment rate of only 0.4%.  The poverty rate (according to the international poverty line of $5.50 a day) is estimated to have fallen only 1.3 percentage points since 2020, reaching 16.6% of the population (World Bank). U.S.-Paraguay bilateral goods trade was $2.3 billion in 2021, a 60 percent increase compared to 2020.  U.S. goods exports to Paraguay were $2.1 billion, up 64 percent ($813 million) from the previous year.  Corresponding U.S. imports from Paraguay were $188 million, up 25 percent.  Paraguay was the United States’ 63rd largest goods export market in 2021.  U.S. exports included electronic equipment, machinery, mineral fuels, pharmaceutical products, cosmetics, vehicle parts, plastic products, toys and sports equipment, and optical and medical instruments.  Imports from Paraguay were primarily products of animal origin, oil seeds and grain, sugar, wood, milling products (malt, starches, etc.), and precious metal and stone.  The U.S. goods trade surplus with Paraguay was $1.9 billion in 2021, a 69 percent increase ($774 million) from 2020.  

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 $6.18 billion (Central Bank of Paraguay).  The United States is the second largest foreign investor in Paraguay ($796 million)   just below Spain ($801 million) followed by the Netherlands ($759 million), Brazil ($715 million), Uruguay ($431 million),  and Chile ($428 million).  Paraguay held $9.4 billion in foreign exchange reserves as of June 2022.  The country’s debt-to-GDP ratio is 34.5 percent as of end of 2021 (up from 22.3 percent as a result of the COVID-19 pandemic).  Inflation was 6.8 percent in 2021.

In 2021, the service sector, including restaurants and hotels, transportation, financing, and retail, accounted for 49.0 percent of GDP.  Agriculture, forestry, fishing, mining and cattle ranching created 10.3 percent of the wealth, with industry constituting another 19.6 percent.  Construction, water and electricity accounted for 13.7 percent, and taxes on products the final 7.5 percent of GDP.

Raw agriculture commodities accounted for 37.8 percent of the $10.55 billion in exports in 2021.  Total exports of agricultural goods accounted for 72.6 percent of total exports in 2021.  Paraguay is the world’s largest exporter of organic sugar and renewable energy, second-largest producer and exporter of stevia, third-largest exporter of yerba mate, fourth-largest exporter of soy, and eight-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. 

Political & Economic Environment:  State Department’s website for background on the country’s political environment.