Economy of Paraguay

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Paraguay has a market economy and is marked by a large informal sector. The informal sector features both reexport of imported consumer goods to neighboring countries as well as the activities of thousands of microenterprises and urban street vendors. Because of the importance of the informal sector, accurate economic measures are difficult to obtain. A large percentage of the population derive their living from agricultural activity, often on a subsistence basis. The formal economy grew by an average of about 3% annually in 1995-97, but gross domestic product declined slightly in 1998 and 1999. On a per capita basis, real income has stagnated at 1980 levels. Most observers attribute Paraguay's poor economic performance to political uncertainty, corruption, lack of progress on structural reform, and deficient infrastructure.

There is a large subsistence sector, including sizable urban underemployment, and a large underground re-export sector. The country has vast hydroelectric resources, including the world's 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 and provides 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.

According to Paraguayan Government statistics, Paraguay's GDP of $7.7 billion in 2000 represented a real decrease of 0.4% from 1999. However, given the importance of the informal sector, accurate economic measures are difficult to obtain. Paraguay generally maintains a small balance-of-payments surplus. In early 2000, official foreign exchange reserves were below $775 million, and foreign official debt remained about $2.2 billion. On a per capita basis, GDP declined by about 3% during 2000, and inflation rose to 8.6%.

1 Post-Stroessner Reforms
2 Statistics
3 See also
4 External links

[edit] Post-Stroessner Reforms

Since 1989, the government has deregulated the economy, which had been tightly controlled by President Stroessner's authoritarian regime. The Rodriguez and Wasmosy administrations eliminated foreign exchange controls and implemented a dirty floating exchange rate system, reformed the tax structure and established tax incentives to attract investment, reduced tariff levels, launched a stock market, and began a process of financial reform. Though the short-lived Cubas administration was hampered by political conflicts, it attempted to reduce the rising government deficit by cutting spending, to fight intellectual property piracy in order to attract foreign investment, and to address a financial sector crisis that had simmered since 1995. The Gonzalez Macchi government has made some progress on state reform and privatization, but the fiscal deficit has grown as has Paraguay's external debt.

The central government budget in 2000, excluding decentralized agencies and store-owned enterprises, represented 20% of GDP.

[edit] Statistics

GDP (purchasing power parity): $30.9 billion (2005 est.)

GDP (official exchange rate): $7.586 billion (2005 est.)

GDP - real growth rate: 3.3% (2005 est.)

GDP - per capita: purchasing power parity - $4,900 (2005 est.)

GDP - composition by sector:

agriculture: 27.5%
industry: 24%
services: 48.5% (2005 est.)

Labor force: 2.68 million (2005 est.)

Labor force - by occupation: agriculture 45%

Unemployment rate: 16% (2005 est.)

Population below poverty line: 32% (2005 est.)

Household income or consumption by percentage share:

lowest 10%: 0.5%
highest 10%: 43.8% (1998)

Distribution of family income - Gini index: 56.8 (1999)

Inflation rate (consumer prices): 7.5% (2005 est.)

Investment (gross fixed): 20.1% of GDP (2005 est.)

Budget:

revenues: $1.334 billion
expenditures: $1.37 billion, including capital expenditures of $700 million (2005 est.)

Public debt: 36.1% of GDP (2005 est.)

Agriculture - products: cotton, sugarcane, soybeans, corn, wheat, tobacco, cassava (tapioca), fruits, vegetables; beef, pork, eggs, milk; timber

Industries: sugar, cement, textiles, beverages, wood products, steel, metallurgic, electric power

Industrial production growth rate: 0% (2000 est.)

Electricity:

production: 51.29 billion kWh (2003)
consumption: 3.528 billion kWh (2003)
exports: 44.17 billion kWh (2003)
imports: 0 kWh (2003)

Electricity - production by source:

fossil fuel: 0%
hydro: 99.9%
nuclear: 0%
other: 0.1% (2001)

Oil:

production: 0 bbl/day (2003 est.)
consumption: 25,000 bbl/day (2003 est.)
exports: NA (2001)
imports: NA (2001)

Current account balance: $-170 million (2005 est.)

Exports: $3.13 billion f.o.b. (2005 est.)

Exports - partners: Uruguay 27.8%, Brazil 19.2%, Argentina 6.3%, Switzerland 4.1% (2004)

Imports: $3.832 billion f.o.b. (2005 est.)

Imports - partners: Brazil 30.9%, Argentina 23.3%, China 16.6%, US 4% (2004)

Reserves of foreign exchange and gold: $1.293 billion (2005 est.)

Debt - external: $3.535 billion (2005 est.)

Economic aid - recipient: NA

Currency: 1 Guarani (G) = 100 centimos

Exchange rates: guarani (G) per US$ - 6,158.47 (2005), 5,974.6 (2004), 6,424.34 (2003), 5,716.26 (2002), 4,105.92 (2001), 3,332.0 (January 2000), 3,119.1 (1999), 2,726.5 (1998), 2,177.9 (1997), 2,056.8 (1996), 1,963.0 (1995); note - since early 1998, the exchange rate has operated as a managed float; prior to that, the exchange rate was determined freely in the market

Fiscal year: calendar year