Economy of Paraguay

Economy of Paraguay

Asunción is the capital and largest city of Paraguay
Currency	Paraguayan guaraní (PYG)
Fiscal year	Calendar year
Trade organizations	WTO, Mercosur, Unasur
Statistics
GDP	$58.3 billion PPP (2014 est.)
GDP growth	4.4% (2014 est.)
GDP per capita	$8,400 PPP (2014 est.)
GDP by sector	agriculture: 19.9%; industry: 17.6%; services: 62.5% (2014 est.)
Inflation (CPI)	5% (2014 est.)
Population below poverty line	34.7% (2010 est.)
Gini coefficient	53.2 (2009)
Labor force	3.26 million (2014 est.)
Labor force by occupation	agriculture: 26.5%; industry: 18.5%; services: 55% (2008)
Unemployment	5.5% (2014 est.)
Main industries	sugar, cement, textiles, beverages, wood products, steel, base metals, electric power
Ease-of-doing-business rank	106th (2017)
External
Exports	$14.61 billion (2014 est.)
Export goods	soybeans, feed, cotton, meat, edible oils, electricity, wood, leather
Main export partners	Brazil 30.8%  Russia 10.8%  Argentina 7.4%  Chile 6.9%  Netherlands 4.5% (2014)
Imports	$12.37 billion (2014 est.)
Import goods	road vehicles, consumer goods, tobacco, petroleum products, electrical machinery, tractors, chemicals, vehicle parts
Main import partners	Brazil 28%  China 25.5%  Argentina 14.6%  United States 7.9% (2014)
FDI stock	$5.604 billion (31 December 2014 est.)
Gross external debt	$8.759 billion (31 December 2014 est.)
Public finances
Public debt	18.4% of GDP (2014 est.)
Revenues	$5.222 billion (2014 est.)
Expenses	$5.651 billion (2014 est.)
Credit rating	Standard & Poor's: BB (Domestic) BB (Foreign) BB+ (T&C Assessment) Outlook: Positive Moody's: Ba2 Outlook: Stable
Foreign reserves	$7.241 billion (31 December 2014 est.)
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars.

Paraguay has a market economy highly dependent on agriculture products. In recent years, the economy has grown as a result of increased agricultural exports, especially soybeans. 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. Paraguay is a middle-income country that changed rapidly in the 1970s and 1980s as a result of hydroelectric development, agricultural colonization, construction, and cash crop exports. Nevertheless, the country's gross domestic product (GDP) in 1986 was approximately US$3.4 billion, or roughly US$1,000 per capita, ranking Paraguay only ahead of Bolivia among the Spanish-speaking countries of South America. Paraguay was the most agricultural economy of South America, and that sector influenced the performance of virtually every other sector of the economy. The over dependence on agricultural economy and low tax collections deteriorated the already wide gap wealth distribution. The extreme poverty increased from 16% to 20% during 2001 to 2012, even the economy growth. By 2013, it has a human development index of 0.669 which is even lower than Bolivia.

The Paraguayan economic miracle of the 1970s came to a halt in 1982 because of the completion of construction at Itaipú, lower commodity prices for cotton and soybeans, and world recession. The economy recovered in 1984 and 1985, stagnated in 1986, and continued to expand in 1987 and 1988. Despite its rapid growth, the Paraguayan economy became increasingly dependent on soybeans and cotton for exports and overall economic dynamism. These two crops, however, remained subject to external price fluctuations and local weather conditions, both of which varied considerably.

Economic growth in the post-World War II period occurred in the context of political stability characterized by authoritarian rule and patronage politics. Government economic policies deviated little from 1954 to the late 1980s, consistently favoring a strong private-enterprise economy with a large role for foreign investment. Unlike most Latin American economies, in Paraguay import tariffs were generally low, fiscal deficits manageable, and exchange rates not overvalued. These trends faltered in the 1980s as the government took a more active part in industry, deficits rose, and the national currency was generally overvalued and devalued numerous times. Throughout the post-World War II era, Paraguay had no personal income tax, and government revenues as a percentage of GDP were among the lowest in the world.