ECONOMY
Paraguay has a predominantly agricultural economy, with a struggling commercial sector. There is a large subsistence sector, including sizable urban unemployment and underemployment, and a large underground re-export sector. The country has vast hydroelectric resources, including the world's second-largest hydroelectric generation facility built and operated jointly with Brazil (Itaipú Dam), but it lacks significant mineral or petroleum resources. The government welcomes foreign investment in principle and accords national treatment to foreign investors, but widespread corruption is a deterrent. The economy is dependent on exports of soybeans, cotton, grains, cattle, timber, and sugar; electricity generation, and to a decreasing degree on re-exporting to Brazil and Argentina products made elsewhere. It is, therefore, vulnerable to the vagaries of weather and to the fortunes of the Argentine and Brazilian economies.
Paraguay's real GDP in 2007 of $12.8 billion (in 2000 dollars) represented an increase of 30.6% from $9.8 billion in 2006. The per capita GDP rose to $1,928 in current U.S. dollar terms in 2007, up from $1,546 in 2006, and surpassing the peak of $1,793 in 1996. Given the importance of the informal sector, accurate economic measures are difficult to obtain. In 2007, Paraguay had a current account deficit of $73 million, derived from a small deficit in the trade of goods, but accompanied by a significant increase in agriculture exports and services (electricity), reflecting favorable market prices for agricultural commodities and exports of electricity from the hydroelectric dams. In 2007, official foreign exchange reserves rose to $2.4 billion, an increase of 41% over 2006, and over four times the figure for 2002 ($582.8 million). Foreign official debt fell slightly from $2.2 billion in 2006 to $2.1 billion in 2007. Inflation in 2007 was 6.0%, down from 12.5% in 2006, and 9.9% in 2005.
Agriculture
and Commerce
Agricultural activities, most of which are for export, represent about 21.9% of GDP and employ just under half of the workforce. More than 250,000 families depend on subsistence farming activities and maintain marginal ties to the larger productive sector of the economy. In addition to the commercial sector with retail, banking, and professional services, there is significant activity involving the import of goods from Asia and the United States for re-export to neighboring countries. The underground economy, which is not included in the national accounts, may equal the formal economy in size, although greater enforcement efforts by the tax administration and customs are having an impact on the informal sector.
Economy
(source: Central Bank of Paraguay and the IMF)
GDP (2007): $12.8 billion.
Annual growth rate (2007): 6.4%.
Per capita GDP (2007): $1,928.
Natural resources: Hydropower, timber, iron ore, manganese, limestone.
Agriculture (21.9% of GDP): Products--soybeans, cotton, beef, pork, cereals, sugarcane, cassava, fruits, vegetables. Arable land--9 million hectares, of which 35% is in production.
Manufacturing and construction (18.7% of GDP): Types--sugar, cement, textiles, beverages, wood products.
Trade (2007): Exports--$6.898 billion: soybeans and soy-related products, cereals, beef, wood, leather, cotton, sugar, apparel, tobacco. Major markets--Uruguay (22.0%), Brazil (17.2%), Russia (11.9%); the United States in 7th place with 3.3%. Imports--$7.012 billion: machinery and mechanical appliances; electrical machinery, equipment, and materials; mineral fuels and lubricants; motor vehicles, tractors, parts and accessories; plastics and articles thereof; fertilizers; beverages and tobacco; toys, games, and sporting equipment; chemical products; rubber and articles thereof; paper, paperboard and articles thereof. Major suppliers--China (27.0%), Brazil (20.0%), Argentina (13.6%), Japan (8.3%), and U.S. (6.3%).
