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 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.
According to International Monetary Fund (IMF) data, Paraguay's real GDP in 2005 of $8.06 billion (in 2000 dollars) represented an increase of 2.9% from 2004. The per capita GDP rose 1.02% to $1,288 in current U.S. dollar terms in 2005, but but it is still below the peak of $1,793 in 1996. Given the importance of the informal sector, accurate economic measures are difficult to obtain. In 2005, Paraguay had a current account deficit of $190 million, with a large deficit in the trade of goods, but with a surplus in services, reflecting exports of electricity from Paraguay’s two large hydroelectric dams shared with Brazil and Argentina. In 2005, official foreign exchange reserves rose to $1.29 billion, an increase of 10.8% over 2004, and an increase of more than 100% from 2002 ($582.8 million). Foreign official debt rose slightly to $2.73 billion. Inflation in 2005 rose to 9.9 %, up from 2.8% in 2004 which was the lowest rate since 1970.
Agriculture
and Commerce
Agricultural activities, most of which are for export, represent about 25.5% of GDP and employ just under half of the workforce. More than 200,000 families depend on subsistence farming activities and maintain marginal ties to the larger productive sector of the economy. In addition to commercial sector with retail, banking and professional services, there is a significant activity involving the import of goods from Asia and the United States for re-export to neighboring countries. The recorded activities of this sector have declined significantly in recent years, largely in response to tighter controls on imports and contraband on the part of Brazil. The underground economy, which is not included in the national accounts, may equal the formal economy in size, although the greater enforcement efforts by the tax administration are having an impact on the informal sector.
Economy
(2005 Central Bank and IMF data)
GDP: $8.06 billion.
Annual growth rate (2005): 2.9%.
Per capita GDP: $1,288.
Natural resources: Hydroelectric sites, forests.
Agriculture (25.5% of GDP): Products--soybeans, yucca, cotton, beef, cereals, sugarcane.
Arable land: 9 million hectares, of which 30% is in production.
Manufacturing (14% of GDP): Types--sugar, cement, textiles, beverages, wood products.
Trade (2005): Exports--$1.68 billion: soybeans, meat, cotton, soybean oil, wood, animal hides, vegetable oil, tobacco, and sugar. Major markets--Uruguay (28.23%), Brazil (19.10%); the United States is 8th place with 3%. Imports--$3.25 billion: fuels and lubricants, machinery, electric materials, transportation and accessories, industrial chemicals, fertilizers, plastics and manufactures, paper and manufactures. Major suppliers--Brazil (27.6%), Argentina (20%), China (19.7%), USA(5.5%).
