| Paraguay has a predominantly agricultural economy, with an important
commercial sector. 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%.
Agriculture and Commerce
Agricultural activities, most of which are for export, represent about 24%
of GDP. More than 200,000 families depend on subsistence farming
activities and maintain marginal ties to the larger productive sector of
the economy. The commercial sector is primarily engaged in 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, placing a strain on government finances,
which depend heavily on taxes on this trade. In general, Paraguayans
prefer imported goods, and local industry relies on imported capital
goods. The underground economy, which is not included in the national
accounts, may equal the formal economy in size. The bulk of underground
activity centers on the unregistered sale of imported goods--including
computers, sound equipment, cameras, liquor, and cigarettes--to Argentina
and Brazil.
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.
GDP: purchasing power parity -
$26.2 billion (2000 est.)
GDP - real growth rate: 1% (2000 est.)
GDP - per capita: purchasing power parity - $4,750 (2000 est.)
GDP - composition by sector:
agriculture: 28%
industry: 21%
services: 51% (1999 est.)
Household income or consumption by percentage share:
lowest 10%: 0.7%
highest 10%: 46.6% (1995)
Inflation rate (consumer prices): 8% (2000 est.)
Labor force: 2 million (2000 est.)
Labor force - by occupation: agriculture 45%
Unemployment rate: 16% (2000 est.)
Budget:
revenues: $1.3 billion
expenditures: $2 billion, including capital expenditures of
$700 million (1999 est.)
Industries: sugar, cement, textiles, beverages, wood products
Industrial production growth rate: 0% (2000 est.)
Electricity - production: 51.554 billion kWh (1999)
Electricity - production by source:
fossil fuel: 0.07%
hydro: 99.79%
nuclear: 0%
other: 0.15% (1999)
Electricity - consumption: 1.915 billion kWh (1999)
Agriculture - products: cotton, sugarcane, soybeans, corn, wheat, tobacco,
cassava (tapioca), fruits, vegetables; beef, pork, eggs, milk; timber
Exports: $3.5 billion (f.o.b., 2000 est.)
Exports - commodities: electricity, soybeans, feed, cotton, meat,
edible oils
Exports - partners: Brazil, Argentina, EU
Imports: $3.3 billion (f.o.b., 2000 est.)
Imports - commodities: road vehicles, consumer goods, tobacco, petroleum
products, electrical machinery
Imports - partners: Brazil, US, Argentina, Uruguay, EU, Hong Kong
Debt - external: $3 billion (2000 est.)
Currency: guarani (PYG)
SOURCES: The World Factbook, U.S. Department of State |