NS4540 Winter Term 2019 Paraguay Indices Europa brazil economy

Paraguay Macroeconomic Trends

Paraguay Strengths/Weaknesses

Paraguay Small Economic Size

Paraguay Population

Paraguay Demographic Profile

Paraguay: Volatile Growth

Paraguay: Poverty

Paraguay Income Distribution

Paraguay: HDI

Paraguay: GDP Structure

Paraguay: Trade Partners

Paraguay: Governance

Paraguay: Economic Freedom

Paraguay: Doing Business

Paraguay Competitiveness I

Paraguay Competitiveness II

Paraguay Minimum Wage

Paraguay: FDI

Paraguay: Projected Growth

Politics The president, Mario Abdo of the right-wing Partido Colorado (PC), succeeded Horacio Cartes as president in August 2018 following a close election. The PC retains control of the Senate (without a majority); fragmentation in Congress will stall legislation. Likely Mr Abdo to slow the market-oriented reform agenda of Mr Cartes. However, he will retain a broadly orthodox economic policy stance during his five-year term.

Assessment I Growth will remain resilient in 2019, driven by strong domestic demand. Maquilas (factories built for foreign companies under the free zone regime) will continue to grow rapidly owing to sharply rising private investment. These are mainly in the assembly of automotive parts (50% of maquila exports) and textiles (32% of the total including shoes). Vibrant performances by the maquilas, do to an attractive tax policy for foreign investors. The maquilas should support job creation and ultimately household purchasing power.

Assessment II Private consumption will be driven by the 3.5% increase in the minimum wage that came into effect in July 2018. The banking system remains fragile, as it is highly dollarized (47% of loans and 45% of deposits in August 2018) and reliant on the agricultural sector, which accounts for a large proportion of the loans granted. Exports will benefit from the relatively improved economic situation in Brazil and Argentina The agro-food sector, which is export-oriented, should continue to expand vigorously.