All though it still goes largely unnoticed internationally, Paraguay is turning out to be one of the big surprises of the Americas. The reason is its spectacular economic growth, that year after year far exceeds its own Central Bank estimates. In 2013 GDP had to be revised upwards no less than three times and at 13.6% Paraguay is the fourth fastest growing country in the world, just behind Turkmenistan, South Sudan and Sierra Leone, according to the IMF.
The major source of growth for Paraguay remains and will continue to be agriculture, which accounts for 80% of its exports. It is not difficult to see why. It is a country of nearly half a million square kilometers with a population of 6.6 million people and where there the cattle herd is 13 million head. It produces 9 million tons of soybean crops annually making it the sixth largest exporter in the world. Strategically located at the very heart of South America and surrounded by large, densely populated countries like Brazil and Argentine with an increasing demand for foods, Paraguay is reinventing itself as the food basket of the region.
Paraguay’s other bonanzas are energy and water, two key commodities that will play a pivotal role in the world economy over the next few decades. It is energy self-sufficient, consuming just 20% of its total electricity production and tariffs are remarkably below the regional average. All of Paraguay’s electricity for domestic consumption comes from a single facility, the 14 GW Itaipu hydroelectric dam, which is jointly owned and operated with Brasil. Itaipu, the world largest hydroelectric dam, produces 17.3% of Brazil total consumption and 72.5% of Paraguay’s consumption. Paraguay also owns 17.2% of the great Guarani Aquifer, the largest freshwater aquifer in South America, covering more than 1.2 million square kilometers and spanning four countries – Paraguay, Brazil, Uruguay, and Argentina. The aquifer underlies nearly 20% of Paraguay, covering a vast landscape of 72,000 square kilometers.
Natural riches aside, the country is making significant efforts towards sound fiscal policies that should bring stability to its currency, namely low tax rates. The recently approved Public Private Partnership Act and further investment incentives will pave the way to large public works projects that will dramatically change the face of the country such as the Paraguay-Parana waterway, better land connections from the capital city and access to the Pacific Ocean through Bolivia and Peru.
