Paraguay: 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 (Itaipu Dam), but it lacks significant mineral or petroleum resources. The government welcomes foreign investment in principle and accords national treatment to foreign investors. 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. Given the importance of the informal sector, accurate economic measures are difficult to obtain.

Paraguay’s 2011 GDP is estimated at $21.192 billion. The economy's 2011 estimated growth rate is 5.5%. In 2010, per capita GDP increased to $2,703 from $2,336 in 2009. The account deficit increased from -0.22% of GDP in 2009 to -1.49% of GDP in 2010. In 2009, official foreign exchange reserves rose to $3.8 billion, up from $2.8 billion in 2008, and over five times the figure for 2002 ($582.8 million). As of April 2011, inflation was 4.4%, up from 2.6% in 2009, but below the 2008 level of 7.5%.

Agriculture and Commerce
Agricultural activities, most of which are for export, represent about 20% of GDP and employ about one-quarter of the work force. 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 be almost twice the size of the formal economy in size, although greater enforcement efforts by the tax administration and customs are having an impact on the informal sector.

According to the Central Bank of Paraguay, Paraguay’s exports were $1.66 billion by April 2011. That was an 8.7% increase over exports as of April 2010. Imports as of April 2011 were $3.39 billion, a 26.9% increase over April 2010.

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