Economy of Paraguay

Economy of Paraguay

The volume of GDP is 5.4 billion US dollars. The GDP growth rate is 2.2%. GDP per capita – $ 940 (one of the last places in Latin America). Unemployment 17.8%. Inflation 14.6%. The share of agriculture in GDP is 20%, industry – 26%, finance and services, including transport and tourism – 54%. The share of employment in agriculture is 45%, industry – 16%, finance and services, including transport and tourism – 39%.

The main cash crops are soybeans, cotton and sugarcane; food – corn, cassava and cassava. Less than 30% of cultivated land is used for agricultural purposes. Forestry is developed (harvesting of valuable species of wood).

According to businesscarriers, the leading branch of agriculture is pastoral animal husbandry of the meat direction. Cattle (more than 6 million heads), pigs, and sheep are bred.

The manufacturing industry is represented mainly by small enterprises. Its leading industries are food (meat-packing, sugar production), cement, textile and woodworking. The country ranks 1st in the world in the production of tung oil. Although Paraguay is rich in mineral resources, the mining industry is underdeveloped.

The country has the richest hydropower potential. On the Paraguayan-Brazilian border is the world’s largest HPP Itaipu (built and operated jointly with Brazil), with a capacity of 12.6 billion kWh. The total production of electricity – 53.1 billion kWh – significantly exceeds the needs of the country, so a significant part of it (47.4 billion kWh) is exported to neighboring countries.

Paraguay is a major producer of marijuana, which comes mainly to South American countries.

Transport infrastructure is poorly developed. The length of railways is 971 km, incl. with a standard gauge – 441 km, roads – 25,901 km, incl. with hard surface – 3067 km. River transport plays an important role in cargo and passenger turnover. The length of navigable waterways is 3100 km. The main ports are Asuncion, Villeta, San Antonio and Encarnacion. 11 airports with paved runways, incl. 2 international (in Asuncion and Ciudad del Este). In 2001, there were 255.2 fixed telephone lines and mobile phones per 1,000 inhabitants. OK. 60 thousand Internet users.

Paraguay is a backward agrarian country with a high share of the informal economy. The shadow economy is estimated to be approx. 50% of GDP. The level of industrialization is one of the lowest in Latin America. Economic growth is seriously hampered by structural problems: an underdeveloped infrastructure, a low level of education, and a strong property stratification of society. Government policy is aimed at curbing inflation by limiting the expenditure side of the budget and tightening tax policy. Traditionally strong positions in the country of foreign capital, which controls more than 80% of private enterprises, 95% of the banking sector, almost the entire manufacturing industry. Tax incentives enshrined in legislation contribute to attracting foreign investment. Government attempts to reduce the state budget deficit (2.6% of GDP) through privatization (in particular, the energy and telecommunications sectors) are hampered by mass protests from workers. Due to resistance from the trade unions, tax reform is also stalling (tax collection is less than 1/3). Under these conditions, the exchange rate of the national currency during 2002 fell by more than 50%. Decreased (to 650 million dollars) and foreign exchange reserves. External debt – 2.3 billion US dollars (over 40% of GDP). Decreased (to 650 million dollars) and foreign exchange reserves. External debt – 2.3 billion US dollars (over 40% of GDP). Decreased (to 650 million dollars) and foreign exchange reserves. External debt – 2.3 billion US dollars (over 40% of GDP).

There are approx. 10 commercial banks and 7 development banks. The only issuing bank is the central bank. Operations with securities are carried out on the stock exchange of Asuncion (operated since 1993).

Below the poverty line is 36% of the inhabitants of Paraguay. The poorest 10% of the population account for less than 1% of income, the richest 10% of Paraguayans – 44%.

Foreign trade turnover (billion US dollars) – 2.3, export – 0.9, import – 1.4. The main export items are electricity, soybeans, timber, cotton, meat, and vegetable oils. Imports are dominated by machinery and equipment, consumer goods, tobacco, and petroleum products. The main foreign trade partners are Brazil, Argentina, Uruguay, and the USA. It is estimated that the smuggling trade exceeds the volume of legal foreign trade operations. Trade turnover with the Russian Federation in 2002 – 5.1 million US dollars, incl. export to the Russian Federation – 4.5 million dollars.

Economy of Paraguay