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Economy of Paraguay

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.

Economy (source: Central Bank of Paraguay and the IMF)
GDP (2011 est., Central Bank of Paraguay): $21.192 billion.
Annual growth rate (2011 est., International Monetary Fund): 5.5%.
Per capita GDP (2011 est., International Monetary Fund): $3,230.
Unemployment (2011 est., International Monetary Fund): 5.9%
Natural resources: Hydropower, timber, iron ore, manganese, limestone.
Agriculture (20% 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 (16% of GDP): Types--sugar, cement, textiles, beverages, wood products.
Trade (2010): Exports--$4.534 billion: soybeans and soy-related products, cereals, beef, wood, leather, cotton, sugar, apparel, edible oils, electricity, tobacco. Major markets--Brazil (15%), Uruguay (22%), Chile (12%), Argentina (12%), and the United States in 11th place with 2%. Imports--$9.4 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 (32%), Brazil (24%), Argentina (16%), Japan (5%), and U.S. (5%).

Geography of Paraguay

Location: Central South America, northeast of Argentina Map references: South America Area: total area: 406,750 sq km land area: 397,300 sq km comparative area: slightly smaller than California Land boundaries: total 3,920 km, Argentina 1,880 km, Bolivia 750 km, Brazil 1,290 km Coastline: 0 km (landlocked) Maritime claims: none; landlocked
International disputes:
short section of the boundary with Brazil, just west of Salto del Guaira (Guaira Falls) on the Rio Parana, has not been determined Climate: varies from temperate in east to semiarid in far west Terrain: grassy plains and wooded hills east of Rio Paraguay; Gran Chaco region west of Rio Paraguay mostly low, marshy plain near the river, and dry forest and thorny scrub elsewhere
Natural resources:
hydropower, timber, iron ore, manganese, limestone Land use: arable land: 20% permanent crops: 1% meadows and pastures: 39% forest and woodland: 35% other: 5% Irrigated land: 670 sq km (1989 est.) Environment: current issues: deforestation (an estimated 2 million hectares of forest land have been lost from 1958-1985); water pollution; inadequate means for waste disposal present health risks for many urban residents natural hazards: local flooding in southeast (early September to June); poorly drained plains may become boggy (early October to June) international agreements: party to - Biodiversity, Climate Change, Endangered Species, Law of the Sea, Ozone Layer Protection; signed, but not ratified - Nuclear Test Ban Note: landlocked; buffer between Argentina and Brazil

Government of Paraguay

Paraguay's highly centralized government was fundamentally changed by the 1992 constitution, which provides for a division of powers. The president, popularly elected for a 5-year term, appoints a cabinet. The bicameral Congress consists of an 80-member Chamber of Deputies and a 45-member Senate, elected concurrently with the president through a proportional representation system. Deputies are elected by department and senators are elected nationwide. Paraguay's highest judicial body is the Supreme Court. A popularly elected governor heads each of Paraguay's 17 departments.

Principal Government Officials
President--Fernando Armindo Lugo Mendez
Vice President--Luis Federico Franco Gomez
Minister of Foreign Affairs--Jorge Lara Castro
Ambassador to the U.S.--Rigoberto Gauto Vielman
Ambassador to the OAS--Bernardino Hugo Saguier Caballero
Ambassador to the UN--Jose Antonio Dos Santos

Paraguay maintains an embassy in the United States at 2400 Massachusetts Avenue, NW, Washington, DC 20008 (tel. 202-483-6960). Consulates are in Miami, New York, and Los Angeles.

Type: Constitutional Republic.
Independence: May 1811.
Constitution: June 1992.
Branches: Executive--President. Legislative--Senate and Chamber of Deputies. Judicial--Supreme Court of Justice.
Administrative subdivisions: 17 departments, 1 capital city.
Political parties: National Republican Association/Colorado Party (ANR), Authentic Radical Liberal Party (PLRA), Beloved Fatherland (PPQ), National Union of Ethical Citizens (UNACE), National Encounter Party (PEN), The Country in Solidarity Party (PPS), Progressive Democratic Party (PDP), Tekojoja Movement, and numerous small parties not represented in Congress.
Suffrage: 18 years of age; universal and compulsory by law up to age 75.

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History of Paraguay

Pre-Columbian civilization in the fertile, wooded region that is now Paraguay consisted of numerous seminomadic, Guarani-speaking tribes of Indians, who were recognized for their fierce warrior traditions. They practiced a mythical polytheistic religion, which later blended with Christianity. Spanish explorer Juan de Salazar founded Asuncion on the Feast Day of the Assumption, August 15, 1537. The city eventually became the center of a Spanish colonial province. Paraguay declared its independence by overthrowing the local Spanish authorities in May 1811. The country's formative years saw three strong leaders who established the tradition of personal rule that lasted until 1989: Jose Gaspar Rodriguez de Francia, Carlos Antonio Lopez, and his son, Francisco Solano Lopez. The younger Lopez waged a war against Argentina, Uruguay, and Brazil (War of the Triple Alliance, 1864-70) in which Paraguay lost half its population; afterwards, Brazilian troops occupied the country until 1874. A succession of presidents governed Paraguay under the banner of the Colorado Party from 1880 until 1904, when the Liberal party seized control, ruling with only a brief interruption until 1940. In the 1930s and 1940s, Paraguayan politics were defined by the Chaco War against Bolivia, a civil war, dictatorships, and periods of extreme political instability. Gen. Alfredo Stroessner took power in May 1954. Elected to complete the unexpired term of his predecessor, he was re-elected president seven times, ruling almost continuously under the state-of-siege provision of the constitution with support from the military and the Colorado Party. During Stroessner's 34-year reign, political freedoms were severely limited, and opponents of the regime were systematically harassed and persecuted in the name of national security and anticommunism. Though a 1967 constitution gave dubious legitimacy to Stroessner's control, Paraguay became progressively isolated from the world community. On February 3, 1989, Stroessner was overthrown in a military coup headed by Gen. Andres Rodriguez. Rodriguez, as the Colorado Party candidate, easily won the presidency in elections held that May and the Colorado Party dominated the Congress. In 1991 municipal elections, however, opposition candidates won several major urban centers, including Asuncion. As president, Rodriguez instituted political, legal, and economic reforms and initiated a rapprochement with the international community. The June 1992 constitution established a democratic system of government and dramatically improved protection of fundamental rights. In May 1993, Colorado Party candidate Juan Carlos Wasmosy was elected as Paraguay's first civilian president in almost 40 years in what international observers deemed fair and free elections. The newly elected majority-opposition Congress quickly demonstrated its independence from the executive by rescinding legislation passed by the previous Colorado-dominated Congress. Wasmosy worked to consolidate Paraguay's democratic transition, reform the economy and the state, and improve respect for human rights. His major accomplishments were exerting civilian control over the armed forces and undertaking fundamental reform of the judicial and electoral systems. With support from the United States, the Organization of American States, and other countries in the region, the Paraguayan people rejected an April 1996 attempt by then-Army Chief Gen. Lino Oviedo to oust President Wasmosy, taking an important step to strengthen democracy. Oviedo became the Colorado candidate for president in the 1998 election, but when the Supreme Court upheld in April his conviction on charges related to the 1996 coup attempt, he was not allowed to run and remained in confinement. His running mate, Raul Cubas Grau, became the Colorado Party's candidate and was elected in May. The assassination of Vice-President Luis Maria Argana and the killing of eight student anti-government demonstrators, allegedly carried out by Oviedo supporters, led to Cubas’ resignation in March 1999. The President of the Senate, Luis Gonzalez Macchi, assumed the presidency and completed Cubas’ term. Gonzalez Macchi offered cabinet positions in his government to senior representatives of all three political parties in an attempt to create a coalition government that proved short-lived. Gonzalez Macchi’s government suffered many allegations of corruption, and Gonzalez himself was found not guilty in a Senate impeachment trial involving corruption and mismanagement charges in February 2003. In April 2003, Colorado candidate Nicanor Duarte Frutos was elected president. He was inaugurated on August 15. Duarte’s administration has established a mixed record on attacking corruption and improving the quality of management. In his first year, Duarte worked constructively with an opposition-controlled Congress, removing six Supreme Court justices suspected of corruption from office and enacting major tax reforms. While Duarte remains the most dominant political figure, he faced stiff opposition mid-term from the opposition strongly opposed to his efforts to amend the Constitution to allow him to run for reelection. Macroeconomic performance has improved significantly under the Duarte administration, with inflation falling significantly, and the government clearing its arrears with international creditors. Unemployment remains stubbornly high and the living standard of most households has not improved. The administration has placed a strong emphasis on participating in international institutions and has used diplomacy to promote the opening of international markets to Paraguayan products. In June 2004, Oviedo returned to Paraguay from exile in Brazil and was imprisoned for his 1996 coup-plotting conviction. In November 2007, Oviedo’s criminal charges were overturned by the Supreme Court, and he is again pursuing the presidency. On April 20, 2008, former Roman Catholic bishop Fernando Lugo (representing a coalition of opposition parties) was elected President. According to the National Election Tribunal (TSJE), Lugo won 40.8% of the vote. Colorado candidate Blanca Ovelar came in second with 30.6% of the vote, and UNACE's Lino Oviedo came in third with 21.9% of the vote. President-elect Lugo will assume office on August 15, 2008. Lugo has identified reduction of corruption and economic inequality as two of his priorities.

People of Paraguay

Paraguay's population is distributed unevenly throughout the country. The vast majority of the people live in the eastern region, most within 160 kilometers (100 mi.) of Asuncion, the capital and largest city. The Chaco, which accounts for about 60% of the territory, is home to less than 2% of the population. Ethnically, culturally, and socially, Paraguay has one of the most homogeneous populations in South America. About 95% of the people are of mixed Spanish and Guarani Indian descent. Little trace is left of the original Guarani culture except the language, which is understood by 95% of the population. About 90% of all Paraguayans speak Spanish. Guarani and Spanish are official languages. Brazilians, Argentines, Germans, Arabs, Koreans, Chinese, and Japanese are among those who have settled in Paraguay with Brazilians representing the largest number. Nationality: Noun and adjective --Paraguayan(s). Population (July 2011 est., CIA World Factbook): 6,459,058. Annual population growth rate (2011 est., CIA World Factbook): 1.284%. Ethnic groups: Mixed Spanish and Indian descent (mestizo) 95%. Religions: Roman Catholic 89.6%; Mennonite and other Protestant denominations. Languages: Spanish (language of business and government), Guarani (spoken and understood by 90% of the population). Education: Years compulsory --9. Attendance-- 87%. Literacy --94.7%. (Paraguayan Directorate of Statistics, Surveys, and Censuses) Health: Infant mortality rate --23/1,000. Life expectancy --74 years male; 79 years female. (CIA World Factbook) Work force (2010 est., 2.038 million): Agriculture --26.5%; manufacturing and construction --18.5%; services and commerce --55%. (CIA World Factbook)