Paraguay 

Paraguay country policy

Policy established 10 February 2003

• Off cover
• Private buyers: SIF facility

Country class: 5

Paraguay country facts

Atradius DSB  Economic Research
Country Report last updated :  7 October 2009
Country :  PARAGUAY  

Political Situation
Fragile Democracy

Head of state
President Fernando Lugo.

Form of government
Government of the Alianza Patriotica para el Cambio (APC).

Internal Economic Situation
Recession In 2009; Weak Structure

General situation
Economic performance relies heavily on agriculture, hydro power and informal (foreign) trade. After a few years of robust GDP-growth thanks to buoyant workers’ transfers and high export prices, global recession has hit the domestic economy as these windfalls turned negative in 2009 and drought curbed agricultural output. Efforts to clampdown on illegal trade have been successful but still large informal activities understate the size of the economy. 
 
External Economic Situation

Reasonable; Still Some Arrears

Main sources of foreign exchange
Agricultural products: soybeans, cotton; hydro energy.

Main foreign markets
Uruguay (17%), Argentina (16%), Brazil (14%), EU (6%).

Main expenses of foreign exchange
Capital goods (46%), intermediate goods (29%).

 
Balance of payments 
The narrow and commodity-dependent export base raises vulnerability to swings in the terms of trade as evidenced in 2008/’09: current account surpluses, some FDI and multilateral inflows contributed to an accumulation of reserves and a strong guaraní until mid-2008; since then some depreciation has occurred due to global risk aversion and lower soy prices.