Blog · 2024-03-07

Paraguay's investment market: a complete overview

An overview of Paraguay's investment market

Paraguay is a landlocked country bordering Brazil, Bolivia and Argentina. It covers roughly 400,000 square kilometres and is home to 7 million people. The local currency, the guaraní, has been in circulation for 79 years and is regarded as the most stable in South America.

The country is divided into 17 departments and a capital district, and falls into two main regions: the Western and the Eastern. Most major cities have river ports. Two languages are spoken here - Guaraní and Spanish.

Today Paraguay is a social state governed by the rule of law, with a democratic political system built on three branches of government: executive, legislative and judicial.

GDP

According to Paraguay's Central Bank, GDP has been growing by 4% a year since 2021. Reserves stand at around 9.5 billion dollars, while external public debt is about 12.7 billion dollars, or 23% of GDP.

In 2008 the country was hit by drought and a drop in agricultural exports, and the economy contracted by 3.8%. From 2014 onward, however, Paraguay's economy began to grow again on the back of high output and strong global commodity prices - precisely when other countries in the region were suffering from economic crisis.

Within GDP, the most significant sectors are manufacturing at 19.7%, trade at 11.6% and agriculture at 7.8%. The fastest-growing sector has been services, at 1.7%.

Exports

In November 2022, manufacturing and agribusiness exported goods worth a combined 5 billion dollars, according to a report published by the deputy minister of industry and trade.

Notably, exports had by then already exceeded the full-year 2021 total by 1.36 billion dollars. The net flow reached 1.92 billion dollars - 21% higher than the previous year.

Leading sectors for foreign direct investment (FDI)

As of the end of 2021, FDI broke down as follows: trade - 1 billion dollars, financial intermediation - 1 billion dollars, oil production - 826 million dollars and transport - 571 million dollars.

Leading source countries for FDI

At present, foreign direct investment comes mainly from investors based in Brazil, the United States, the Netherlands, Spain, Chile and Uruguay.

Business-climate rating

On average since 2013, Paraguay has earned the most favourable ratings on both the current-situation index and the expectations index.

Strategically located and open to the world, Paraguay is a land of opportunity that offers a distinctive programme of investment in major projects. It allows applicants to obtain the country's passport on a fast track - in just 6 to 12 months. The programme gives investors and their families the benefits of holding a Paraguayan passport, including visa-free travel to 146 countries such as the Schengen area, the United Kingdom and Singapore; eligibility for a US E-2 visa; the ability to optimise taxes (a 10% rate); and the chance to live in a country with a high standard of living and a favourable climate.

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