Economy of Paraguay - Structure of The Economy

Structure of The Economy

The most important component of the Paraguayan economy is the farming sector, which contributed 27% to GDP in 2006. The participation of commerce was 20.2%, and that of other services, including government, 38.4%. Industry’s part (including mining and construction) was about 20%.

After years of economic crisis, between 1999 and 1984, the Paraguayan economy grew at between 2.9 and 4.1% per year from 2003 to 2006. For 2007, the estimated growth is about 6.4%. Inflation in 2007 reached 6.0%.

Most enterprises are small, micro and individual ones, including subsistence jobs like street vendors. Only 4% of the Paraguayan labor force works in companies with more than 50 employees.

In June 2007 external foreign exchange reserves amounted to US$ 2153 million, and the foreign official debt US$ 2154 million, close to parity.

Fiscal surplus is provisionally reported as 0.5% of GDP in 2006 and 2007.

Paraguay’s economy (GDP) grew 5,8% in 2008, fastest growing sector being agriculture with 10,5% growth

Agriculture accounts for about 20 percent of Paraguay's annual gross domestic product (25 percent in 2004) and virtually all of the country's export earnings. It is Paraguay’s largest and most consistent source of employment, employing about 45 percent of the working population. In addition to those engaged in the formal agricultural sector, thousands of Paraguayan families survive through subsistence farming.

Paraguay produces enough basic food to be largely self-sufficient. Corn, cassava, and wheat are the main food crops for local consumption. The global surge in grain prices 2007/2008 was a major impulse for the agricultural sector. Wheat cultivation expanded, so did rice. Most significant was the increase of soy production. In 2004 Paraguay had about 1.6 million hectares dedicated to genetically modified (GM) crops. Export value of soy and its derivates increased from US$1,25 billion in 2007 to US$2,54billion in 2008

Paraguay’s eastern plains as well as the Chaco support the country’s dairy and ranching industry. Behind soybeans, beef exports make up a significant part of Paraguay’s agriculture sector. Additionally, Paraguay produces an adequate supply of beef, pork, and dairy products to meet domestic needs. The discovery of cases of foot-and-mouth disease in 2002 and 2003 led to a ban on Paraguayan beef in many countries. However, in 2004 Paraguay’s meat production and exports rebounded. As a result of rising international prices and the recovery of important markets like Chile or Russia, Paraguay’s meat exports rose to US$143 million in 2004. They reached US$353 million in 2007 and US$597 million in 2008. Presently, Paraguay has a national herd numbering between 9 and 10 million head of cattle.

Paraguay’s forests adequately meet domestic needs for lumber and fuelwood. However, logging for export, both legally and illegally, has thinned Paraguay’s once abundant forests, resulting in a ban on the export of logs since the 1970s. More than 90% of the native rainforest of Paraguay's eastern half have been lost between 1975 and 2008. In the western half, the Chaco, virgin forest is lost to cattle ranching at an annual rate of more than 200.000 hectare (2008). Sustainable wood cultivation is now on the increase.

The fishing industry in Paraguay exists almost solely to meet domestic demand.