flag Paraguay Paraguay: Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Even though Paraguay is among the poorest countries in South America, the country has experienced high and steady growth in the past decade. According to the IMF, GDP grew by 4.5% in 2021, driven mainly by household consumption. Nevertheless, GDP growth is expected to decrease to 3.8% in 2022 before picking up to 4% in 2023.

Since 2013, Paraguay has adopted a Tax Responsibility Law, which sets the limit of the authorised fiscal deficit at 1.5% of GDP. Public deficit decreased to 0% in 2021, and the government should continue its prudent fiscal policy, keeping to the deficit limit of 1.5% of GDP set in the Responsibility Law. Paraguay has invested in many public development policies and has seen its foreign debt double over the last five years. Still, Paraguay's public debt is among the lowest in Latin America, at 38.4%, and should remain stable in the next couple of years (39.5% in 2022 and 39.9% in 2023). Inflation increased to 3.5% in 2021, and it is expected to slightly increase in the next two years, to 4% both in 2022 and 2023. Those rates, however, are within the target range set by the central bank - between 2% and 6%. The agriculture, sales and construction sectors continue to be the driving forces behind Paraguay's economic growth. The production of the Itaipu and Yacireta hydro-power plants, as well as highly productive farms and livestock, are economic drivers and account for more than 60% of Paraguay's total exports. In 2021, the government continued implementing a series of fiscal measures to mitigate the impact of COVID-19, which included lowering VAT on medical supplies to 5% and eliminating import tariffs on them, additional health-related spending, measures to support the vulnerable population, and emergence funding for SMEs. Overall, Paraguay's measures have been effective in boosting economic activity, which has been gradually recovering.

Paraguay has the lowest unemployment rate in the Mercosur area, which was an estimated 6% in 2021, despite the negative economic impact of the COVID-19 pandemic. That rate is expected to slightly decrease in 2021 and 2022, to 5.9% and 5.8%, respectively. However, poverty and income inequality remain major challenges. Still, the total poverty rate – which the World Bank defines as less than USD 3.10 a day – has been falling, and is currently 26.1%. Nevertheless, the extreme poverty rate (which concerns individuals living on less than USD 1.90 a day) has risen, going from 5.4% to 5.7%. In rural areas, 41.2% of the population lack a monthly income to cover basic necessities, whereas in urban centres this figure is 27.6%. Moreover, land concentration in the Paraguayan countryside is one of the highest in the globe, with 10% of the population controlling 66% of the land, while 30% of the rural people are landless, causing ongoing tension between the landless and elites.

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 35.43e38.8241.8644.6247.02
GDP (Constant Prices, Annual % Change) -0.84.20.24.33.5
GDP per Capita (USD) 45556
General Government Balance (in % of GDP) -6.5-6.4-4.6-3.4-2.3
General Government Gross Debt (in % of GDP) 36.937.739.338.938.7
Inflation Rate (%) 1.84.89.54.54.1
Current Account (billions USD) 0.960.31-1.60-0.04-0.56
Current Account (in % of GDP) 2.70.8-3.8-0.1-1.2

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
Paraguayan Guarani (PYG) - Average Annual Exchange Rate For 1 GBP 7,656.307,231.557,647.587,800.888,680.90

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 18.7 18.1 63.1
Value Added (in % of GDP) 10.8 33.3 48.8
Value Added (Annual % Change) 7.1 0.4 -3.5

Source: World Bank - Latest available data.

 
Socio-Demographic Indicators 2022 (e)2023 (e)2024 (e)
Unemployment Rate (%) 7.26.46.1

Source: IMF – World Economic Outlook Database - Latest available data

 

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The Active Population in Figures

201820192020
Labour Force 3,534,8623,625,0513,562,864

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 73.78%75.49%76.18%
Men activity rate 87.01%87.65%88.10%
Women activity rate 59.99%62.82%63.76%

Source: International Labour Organization, ILOSTAT database

 

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Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
62,6/100
World Rank:
84
Regional Rank:
16

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
3/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
100/180

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Sources of General Economic Information

Main Online Newspapers and Portals
Última Hora (in Spanish)
La Nación (in Spanish)
Merco Press (in English)
Paraguay News Sites and Guides
Paraguay Newspapers online
Useful Resources
Ministry of Finance
Ministry of Industry and Commerce
Ministry of Foreign Affairs
Ministry of Interior
Ministry of the Environment and Sustainable Development
Ministry of Justice
Official list of ministries and their websites
Central Bank of Paraguay
 
 

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Latest Update: October 2022

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