Population 7.4 million
GDP 5,279 US$
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major macro economic indicators

  2020 2021 2022 2023 (f) 2024 (f)
Croissance PIB (%) -0.8 4.0 0.1 4.5 3.8
Inflation (moyenne annuelle, %) 1.8 4.8 9.8 4.7 4.0
Solde public / PIB (%) -7.0 -6.0 -3.7 -4.2 -2.0
Solde courant / PIB (%) 3.6 -0.8 -6.0 0.6 0.1
Dette publique / PIB (%) 36.9 37.5 40.8 41.0 43.0

(e): Estimate (f): Forecast 


  • Well-developed agricultural sector (soybeans and beef)
  • Abundant hydroelectric resources and forest potential conducive to green energy production
  • Prudent fiscal and monetary policies


  • Dependency on the agricultural sector and a handful of trading partners (Brazil and Argentina)
  • Vulnerability to climatic conditions
  • Significant informal market (40% of GDP), smuggling with Argentina
  • Low fiscal resources (17% of GDP)
  • Weak governance (corruption and cronyism)
  • Poor infrastructure (waterways, roads, power lines)
  • Deficient health and education services


Growth remains subject to meteorological conditions

In 2024, economic activity will progress at a slightly slower pace. Following a severe drought in 2022, the return of rainfall allowed the export sector to experience a strong rebound in 2023 (a 50% increase in agricultural production and a 21.2% increase in hydroelectric production). Compared to this high base in 2023, the growth of agricultural (soy and meat) and hydroelectric exports is expected to slightly decelerate in 2024. Nevertheless, this slowdown will not prevent the export activity from still contributing positively to growth. Precipitation is expected to continue favoring river navigation (by far the main means of commercial transport) and agricultural production, provided that the El Niño phenomenon is not excessive, as excessive El Niño could lead to detrimental floods. However, export activity will not be immune to the economic slowdown in some of its major trading partners (Argentina, Brazil, and Russia), nor to the decrease in global agricultural commodity prices. Additionally, Paraguay only consumes 41% of its share of electricity produced by the Yacyretá and Itaipu hydroelectric plants, located on the Paraná River and shared with Argentina and Brazil, to which the remainder is exported. Furthermore, private consumption will support growth, revitalised by disinflation and a favorable labor market (unemployment rate estimated at 6.2% in 2023, lower than the pre-pandemic level of 6.6%). The potential for the development of the forested area, significantly damaged by past deforestation driven by livestock development, is expected to attract investments. In this regard, the construction of the country's first major paper pulp factory by Paracel is expected to commence in 2024, and the construction of biodiesel by Omega Green by the end of 2025, financed by both national and foreign actors. The eucalyptus plantation in 2024, under the national reforestation plan, aims to expand the forested area. However, after a peak in budgetary spending related to the 2023 elections, private consumption and public investment will be constrained by the government's budget consolidation plans. Meanwhile, the construction sector (down by 4.8% year-on-year in the first quarter of 2023) is expected to see its negative trend moderate, or even reverse, pending favorable weather conditions. The maintenance of public-private partnerships, initiated in June 2021, should support the construction of public infrastructure. In December 2023, Argentina, Chile, Brazil, and Paraguay announced their reliance on a private initiative to finance the bi-oceanic corridor project, envisioning the construction of a highway by 2025 linking the Brazilian port of Santos to the northern coast of Chile.


The current account's sensitivity to weather conditions and ongoing budget consolidation is notable

In 2023, the current account returned to a slight surplus due to a positive trade balance. The significant rebound in agricultural exports and, to a lesser extent, hydroelectric sales, more than compensated for the rise in imports, accompanying the improvement in domestic demand, which was further mitigated by the decline in fuel and fertilizer prices. However, starting in 2024, the intensification of private investment, stimulating imports of machinery and other capital goods, will once again exert pressure. The deficit in the services balance decreased due to the normalisation of tourism and river activity, which had suffered from the intense drought of 2022. Similarly, the increase in remittances from expatriate workers (1.3% of GDP in 2022), given a favorable job market in Spain (63.7% of remittances) and the United States (12.7%), strengthened the surplus in secondary income. Conversely, the deficit in primary income widened further, as the economic recovery increased profits repatriated by foreign companies. Foreign Direct Investment (FDI) and portfolio investment flows remained particularly high in 2023 by Paraguayan standards and are expected to benefit from the renewed attractiveness of the forestry sector in 2024. Foreign exchange reserves are strengthening (expected to cover 7.5 months of imports by the end of 2024), surpassing their pre-crisis level in 2018.
On the budgetary front, the deficit worsened in 2023, surpassing the government's target of 2.3% once again. The repayment of arrears to suppliers, estimated at 1.1% of GDP, combined with the general elections in April 2023, led to a relaxation in spending. Consequently, the law on budgetary responsibility, limiting the nominal deficit to 1.5% of GDP, will remain suspended once again in 2024. Starting from this year, the public balance is expected to resume a downward trend, supported by an economic recovery and increasing tax collection. To combat informality in the economy and the suboptimal revenues it generates (only 14% of GDP in 2021), the government implemented an electronic invoicing system in 2022. This process has proven effective with small and medium-sized enterprises, which had previously escaped public scrutiny, and is expected to continue boosting public revenues in 2024. Last, public debt is expected to remain manageable despite trending upwards. New financing has been mobilised to be able to pay suppliers, explaining its increase in 2024. Almost exclusively denominated in dollars (91%), it is evenly distributed between multilateral creditors (45%) and bondholders (42%). Its external component, representing 77% of the total, is expected to trace a downward trend.


Presidential promises come up against weak political institutions

Elected with 42.7% of the votes and in office since August 2023, President Santiago Peña of the conservative Colorado Party (Partido Colorado, PC) is already witnessing a decline in popularity. Despite his campaign promises to combat crime and corruption, slow progress in these areas has led to deep frustration and disillusionment among his supporters. An anti-smuggling plan was adopted in September of the same year aiming to reduce tax evasion by restricting the illegal passage of goods across borders. While some results have been achieved with Argentina, it remains ineffective with Brazil. Meanwhile, corruption continues to be a central topic in political debate. Peña's initiatives to address corruption, the aim of which is to enhance national attractiveness for foreign investors (Public-Private Partnership projects, carbon credits), face a poor business climate and institutional weakness. The fact that the PC has held power for 75 out of the last 80 years contributes to this situation. According to the Corruption Perceptions Index, Paraguay ranked 137th out of 180 in 2022. Budget consolidation is another government priority. In addition to the electronic invoicing system, Peña will continue his pension reform programme. In its current form, certain groups, namely the national police, the armed forces and teachers contribute less than other citizens. However, political instability will hinder even slight progress on these reforms. Legislative gains of the Presidential faction within the PC, Honor Colorado (HC), which currently holds 42 out of 80 seats in the lower house (compared to 35 in August 2023) will not be enough to damp escalating tensions within the party. On that score, the US Treasury's corruption sanctions against Peña's main political ally, Horacio Cartes (president from 2013 to 2018 and current leader of the PC), have revived traditional divisions between pro- and anti-Cartes factions. Additionally, conservative members of the PC may be reluctant to support the more structural reforms proposed by Peña. Given the slow legislative process, social and political tensions are likely to persist in 2024, making the implementation of the presidential political agenda more challenging than anticipated.
On the external front, the year 2024 will be primarily marked by the continuation of negotiations with Brazil regarding the bilateral treaty governing their Itaipu Dam, which expired in August 2023. Asuncion aims to sell its unused share of electricity production to third countries at a higher price, a practice which has been prohibited for 50 years. The Brazilian government may be open to more favorable terms for Paraguay. However, given Paraguay's limited bargaining power and lack of significant progress may fuel national political and social tensions. Additionally, Argentina, Paraguay’s second-largest trading partner, unilaterally imposed a toll in January 2023 to finance its own construction work on the Paraguay and Paraná rivers (Hidrovía Paraná-Paraguay), the main commercial route for Paraguay. In response, the Paraguayan government temporarily stopped supplying Argentina with its unused portion (almost the entire quota) of hydroelectric energy from Yacyretá in September of the same year. Even though navigation companies do not pay the toll, river traffic is normal, providing optimism for the continuation of negotiations among the five countries party to the waterway treaty in 2024. Last, the Peña government plans to strengthen ties with Taiwan, which could earn it some goodwill from the United States. Despite the reduction in cattle herds which has increased domestic prices and limited supply, Washington has already accepted Paraguayan beef imports after a 25-year ban for non-compliance with the US health protocol. However, Paraguay’s government may face renewed pressure from farmers as maintaining diplomatic relations with Taiwan prevents them from exporting their agricultural products directly to mainland China.


Last updated: March 2024