What Is the GDP of Paraguay and Its Main Drivers?

Gross Domestic Product (GDP) is a fundamental economic indicator, representing the total monetary value of all finished goods and services produced within a country’s geographical borders over a specific period. It provides a snapshot of a nation’s economic activity and productivity. Understanding a country’s GDP helps assess its economic health and growth trajectory.

Paraguay’s Current Economic Output

Paraguay’s economic output is measured using both nominal GDP and GDP at purchasing power parity (PPP). Nominal GDP reflects the market value of goods and services at current prices, while PPP adjusts for differences in the cost of living and inflation rates between countries, offering a more comparable measure of economic size and living standards. For 2024, Paraguay’s nominal GDP is estimated at $44.46 billion, and its GDP at purchasing power parity reached an estimated $128.35 billion.

Main Drivers of Paraguay’s Economy

The primary drivers of Paraguay’s economy are its natural resources and strategic economic policies. Agriculture is a significant sector, with the country being a major global exporter of soybeans, beef, corn, wheat, and sugarcane. Hydroelectric power also plays a role, with the Itaipu Dam, a joint venture with Brazil, positioning Paraguay as a leading producer of renewable energy.

Manufacturing, particularly in food processing, textiles, and automotive assembly, further contributes to the economy. The services sector, encompassing retail, telecommunications, and financial services, has emerged as the largest contributor to the country’s GDP. The construction sector is also an economic driver. Special incentives for manufacturing exports, known as maquila operations, attract foreign investment and boost production.

Recent Economic Performance

Paraguay’s economy has demonstrated varied growth trends, influenced by internal and external factors. In 2020, the country experienced a slight contraction with a GDP growth rate of -0.82%, due to the global economic slowdown. The economy rebounded in 2021, achieving a growth rate of 4.02%, followed by a more modest 0.18% in 2022. This recovery was supported by increased agricultural exports and a stable macroeconomic environment.

The economy continued its upward trajectory, growing 4.71% in 2023. Forecasts indicate sustained expansion, with an estimated growth of 4.0% in 2024 and 3.8% in 2025. Fluctuating commodity prices and regional economic conditions have impacted these trends. Despite challenges like climate variations affecting agriculture, foreign investment and consistent export performance have underpinned Paraguay’s economic resilience.