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  • Paraguay, a small country with great export potential

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    With a territory that barely exceeds 406 thousand square kilometers and just over 7.6 million inhabitants, the Paraguay’s export potential exceeds that of much larger countries from the continent.

    Its territory and population are small compared to its neighbors Argentina, Bolivia and Brazil. But in return Paraguay stands out for having a very stable economy and growing steadily.

    This is remarkable in a world that has not yet recovered from the Covid-19 pandemic and is now facing rising cost of oil and gas prices as a result of the sanctions of Europe and the United States against Russia for its military intervention in Ukraine.

    In this situation, the country has managed to maintain its exports to its traditional clients and has even achieved new markets in the last two years.

    Currently 41 countries receive products from Paraguay, which demonstrates the commercial success of its public and private companies.

    Paraguay’s export potential in figures

    Before we continue talking about the Paraguay’s export potential we must review some important figures on its economy.

    In 2021, the Republic of Paraguay had a GDP of 40,305 million dollars, which represents a Gross Domestic Product per Capita of US $5,481.

    In addition, it began the year 2022 with more than USD 9,600 million in the coffers of its international reserves and a public foreign debt of just USD 11.45 billion.

    This places the country’s debt in a very manageable margin in the face of unforeseen future events in world markets and in the value of hard currencies.

    To this is added that by 2022 it is estimated that the Paraguayan economy will grow by 3.7% and its inflation will remain around 6.5%.

    As for what the country produces, in 2021 the Central Bank of Paraguay indicated that the manufacturing sector contributes 20% of GDP, followed by commerce ( 10%), government services (9%), construction (8%) and agriculture (7%),

    Other important sectors were the production and sale of hydroelectricity (7% of GDP), as well as transportation (4%) and livestock (3%). The financial and banking sector (6%) and telecommunications (3%) also stood out

    Paraguayan exports grow steadily

    The figures obtained in the so far in the 21st century demonstrate Paraguay’s great export potential and the success achieved in its trade policies with the rest of the world.< /span>

    In 2003, Paraguayan exports reached a total of USD 2,500 million, of which 50% corresponded to the sale of electricity to neighboring countries and another 29% to primary products .

    Exports of manufactures of agricultural origin (MOA) were in third place, with a percentage of 17%, followed by those of industrial origin (MOI) that reached 4%.

    By 2021 Paraguayan exports had risen to USD 10,547 million< span style="font-family: Arial, serif;">, of which 47% corresponded to primary products.

    For their part, exports of manufacturing of agricultural origin (MOA) consolidated in second place with 26% and electricity in third position, with 15%.

    In fourth position are now exports of products of industrial origin (MOI), with 10% of the total.

    Regarding the destination of Paraguayan products, the Main markets are located in the Americas, Europe and Asia. There is also an exchange with Australia, but so far there are no direct exports to Africa.

    Leadership in the productive area

    Detailing the main Paraguayan exports , we have that this country occupies the < b>first place worldwide in clean energy exports, in this case based on hydroelectric generation.< /p>

    It is also the world’s second largest producer of stevia, a natural sweetener in great demand, as well as the world’s third largest exporter of yerba mate.

    Additionally, Paraguay is the fourth world exporter of soybeans and the sixth of soybean oil. In livestock, it is the eighth exporter of beef.

    An excellent country to do business

    Currently Paraguay leads the ranking of Latin American countries with the best climate for doing business, followed by Chile, Brazil, Colombia, Peru and Mexico.

    Regarding the ease index to carry out projects with national or foreign investment, the World Bank places it in the middle term at a continental level along with Brazil and Argentina.

    But if something tilts the balance in favor of Paraguay when it comes to doing new business, it is its tax system.

    This is the country with the simplest tax system and offers more incentives for foreign or domestic investment compared to any other on the continent.

    For example, income taxes, personal income and VAT are set at 10% while taxes on contributions barely reach to 35%. In comparison, Argentina, Brazil, Chile and Uruguay apply taxes that triple those of Paraguay.

    This is largely due to the latest tax reforms applied in the country, which took into account the importance of attracting foreign capital.

    Both foreign companies and individuals enjoy a special low-tax regime that ranges from 10 to 23.5%. Even taxes are not applied to the remittance of profits to the parent companies of foreign companies.

    Access to expanded markets

    Finallye, we must mention another condition that has underpinned Paraguay’s export potential so far in the 21st century.

    As a member of the Southern Common Market (Mercosur), Paraguay has access to an expanded market

    from more than 260 million consumers.

    Within Mercosur, Paraguayan products are exempt from many tariffs that are applied in other member countries.

    It also benefits from special regimes when importing raw materials, agricultural supplies, capital goods, telecommunications or computer equipment .

    The automotive products made in Paraguay with a high content of national raw material can be exported to Mercosur with a 0% tariff, provided that each sale does not exceed the USD 35 million.

    Finally, it should be noted that the Paraguayan Government launched a post-pandemic strategic plan based on taking advantage of the potential of the country. These potentialities are:

    • High quality of life at a reasonable cost

    • High population growth rate

    • High availability of skilled labor

    • Cheap energy galore

    • Abundance of renewable natural resources

    • Privileged position within Mercosur

    The main idea of ​​this plan is to promote the growth or reactivation of key sectors for the country, such as the creative industries, the tourism, agribusiness, light manufacturing, professional services, forestry, IT, and regional logistics.

    In conclusion, Paraguay has recognized export potential but also future plans to take advantage of it.

    This will undoubtedly place Paraguay in a privileged position with respect to other nations where political uncertainty and the lack of an economic plan prevail post-pandemic.

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