Paraguay’s Challenge

Macro Watch: The economy of Paraguay, mainly based on raw materials exports, has been showing important growth in the last few years. The main export is soy products, which account for 43% of total exports and represent nearly USD 1,500 million of income. The total exports of the country include 0.5% soy flour, 35% soy grain, and 7% soy oil.

Soya Seed Exports of Paraguay

Chart provided by: CEIC Data

According to the central bank, the value of registered imports represented USD 9,400 million in 2010, while registered exports represented USD 4,500 million, resulting in a trade balance deficit. In addition, the central bank also shows in the balance of payment account that imports were estimated at USD 9,900 million and exports, USD 8,300 million. This gap between registered and estimated exports represents a big challenge for Paraguay—how to reduce the high percentage of black market trades, which are almost half of the real total exports. Another challenge may be adding aggregate value to soy grains, because 82% of total soy exports are unprocessed; solving this problem could increase Paraguay’s activity and close the gap of commercial balance.
In 2010, the Paraguayan economy had a historical GDP expansion, hiking a record 15%, mainly because of the agricultural sector, which rose 47%. Nevertheless, the country has to be alert to the effects of global economic instability, as the international prices of agriculture commodities could influence Paraguay’s economy.
Discuss this post and many other topics in our LinkedIn Group (you must be a LinkedIn member to participate). Request a Free Trial Subscription.
By Ana Laura Urús in Argentina – CEIC Analyst