Paraguay is ranked as a middle-income nation, and its GDP was roughly $3.4 billion in 1986 in comparison to $58.3 billion in 2014. Paraguay's economy heavily relies on agricultural products, some of which like soybeans and corn are exported in large quantities. Its few mineral resources coupled with political instability are some of the challenges it has had to grapple with in its quest for economic development. The country benefited from positive economic changes in the 1970s going into the 1980s due to the tapping of its hydroelectric potential, cash crop exports, construction, and agricultural colonization. The agricultural economy was at the center of the country, and this over-reliance together with low tax collections facilitated an economic downturn. The distribution of financial benefits become even more inequitable. Paraguay enjoys some economic advantages such as vast hydroelectric power and a young population. Paraguay's government has been keen on developing this potential to improve the nation's economic standing.
About 20% of the nation's yearly gross domestic product is derived from agriculture which is responsible for the employment of 45% of Paraguay's labor force. This industry witnessed rapid development in the 1970s and 1980s as soybean and cotton prices rose while agricultural colonization enabled more land to be utilized for cultivation. The sector was however severely impacted by flooding and droughts which slowed down the advances implemented. The country can cultivate adequate basic food products to be largely self-sufficient. Wheat, corn, and cassava rank as Paraguay's major food crops. Soybean production was promoted in the 1960s, and by 1980s it had become the nation's most prominent crop. An Italian-Paraguayan company group constructed a $10 million cotton-spinning plant near Asuncion and the processed cotton heads and exported primarily to Brazil and Italy. Brazilian investors have further constructed and renovated other cotton mills. Paraguay also produces coffee, citrus fruits, peanuts, rice, sugarcane, sorghum, beans, and sweet potatoes. The Chaco region, as well as the country's eastern plains, are home to a dairy and ranching industry. Beef exports constitute an important portion of the nation's agriculture industry. Paraguay's forests sufficiently satisfy the local needs for fuelwood and lumber although logging for export has reduced the State's once abundant forests.
The first manufacturing industries in the nation processed leather and hides from its numerous quebracho trees and abundant cattle. Such small-scale manufacturing as textiles prospered during the Francia dictatorship. The textiles and leather sub-sectors in Paraguay are supported by the availability of cattle hides and cotton fibers. Wood production and processing is another important sector in Paraguay. The country's native tree species have unique wood material, and it boasts over 18 million hectares of tropical forest. This wood material translates to high-quality products from building and carpentry components, timber, to floorboard wood. The pharmaceutical sector in the nation has been growing steadily and is now able to supply 70% of local consumption. The sector has been rivaling foreign firms, and it is even exporting drugs. Paraguay's primary manufacturing revolves around food and beverages, non-metallic mineral items, paper, and hides and furs. Imports, however, threaten the textile sector in Paraguay. The country is also the biggest exporter of organic sugar in the world, and it also has a significant cement producing sector.
Hydropower represents almost 100% of Paraguay's electricity where 90% of the generated electricity is exported mainly to Argentina and Brazil. Paraguay's hydroelectric dams are the Corpus Christi, Itaipu Dam, and the Yacyretá Dam. These dams lie along the Paraná and Paraguay rivers, and they were established as a result of collaborations with Brazil and Argentina. The National Electricity Administration oversees the nation's electricity market from generation to distribution. Only two firms purchase electricity from the state-owned utility and possess concessions to sell and distribute it. The Itaipu Dam boasts 13.3 gigawatts in power-generating capacity which is the 2nd largest in the world. Paraguay consumed a mere 16% of its 50% total share of the dam's production in 2004, and the rest was channeled to Brazil. Yacyretá Dam possesses an installed capacity of 900 megawatts. More than 60% of the electricity consumed in Paraguay is utilized in the Asunción area. 41% of the electricity consumed in the state is utilized by residential households while 18.3% and 26% is used for commercial and industrial purposes respectively. Nearly 90% of Paraguay's inhabitants enjoyed access to electricity in 2005.
About 51% of the nation's GDP is derived from the service sector. Trade and transport is the most important sub-sector as Paraguay has been able to benefit profoundly from the Parana and Paraguay Rivers. Being a landlocked nation, these two rivers are of particular importance to its economy. The importations of items particularly from Brazil and Argentina for sale and also for illegal re-exportation creates jobs in the service sector. Other service sub-sectors are yet to contribute a substantial portion to Paraguay's GDP. Paraguay's territory represents various numerous tourism activities. It has a varied geography and suitable weather. The nation further prides in an enthralling history and unique folk art. Many urban inhabitants like to vacation in countryside ranches in addition to some global tourists. Visitors can engage in boating, horseback riding, swimming, and hiking. Rural establishments which engage in agriculture and livestock rearing welcome tourists interested in participating in sports, relaxation, and field activities. One of these establishments is the Agroganadera Jejui which lies 291 km from Asunción. It offers first-class conditions for river trips and fishing.
Banking and Finance
The banking sector continues to recover from the 1995 liquidity crisis when reports of extensive corruption forced multiple significant banks to cease operations. Foreign firms completely or partially own Paraguay's financial institutions. The Republic's Central Bank is tasked with preventing such a crisis as the one witnessed in 1995 from taking place again. The Sudameris Bank is among the institutions operating in the nation. Paraguay's stock market has been operating since 1993 although economic uncertainty and a tradition of family-run businesses attracted low investment in the 1990s. A large credit union industry also exists in Paraguay which is not included in the Central Bank's purview.
What are the biggest industries in Paraguay?
"Paraguay's economy relies heavily on agricultural products like soybeans and corn. About 20% of the nation's yearly gross domestic product is derived from agriculture which is responsible for the employment of 45% of Paraguay's labor force"
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