Paraguay Economy
 

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PARAGUAY
GDP: $28.7 billion.
Annual growth rate: 2.6% (2003).
Per capita GDP: $4200.

Budget: Income .............. $2.93 Billion
Expenditure ... $2.866 Billion

Main Crops:
Cotton, sugarcane, soybeans, corn, wheat, tobacco, cassava (tapioca), fruits, vegetables; beef, pork, eggs, milk; timber.

Natural Resources: Hydropower, timber, iron ore, manganese, limestone .

Major Industries:
Meat packing, oilseed crushing, milling, brewing, textiles, other light consumer goods, cement, construction.

NATIONAL GNP
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 (Itaipœ 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 Paraguayan Central Bank (BCP) data, Paraguay's real GDP in 2003 of $8.5 billion in 1982 dollars represented an increase of 2.6% from 2002 ($8.3 billion), after steady decreases during the previous several years. The GDP per capita rose slightly, to $1,019 in current US dollar terms, but has fallen by nearly a third over the past ten years. Given the importance of the informal sector, accurate economic measures are difficult to obtain. Paraguay presently maintains a small balance-of-payments surplus. In 2003, official foreign exchange reserves rose to $983 million, and foreign official debt rose slightly to $2.28 billion. Inflation in 2003 dropped to 9.3%.

Agriculture and Commerce
Agricultural activities, most of which are for export, represent about 21.1% 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.