Asuncion, IP Agency.- The World Bank presented a report which highlights Paraguay‘s comparative advantages, such as its natural resources, a young population and a stable macroeconomic environment, which gives it great potential to accelerate its transition towards a high-income economy.
“From a landlocked land to a land of opportunity” is the title of the report on Paraguay’s economic growth, a document prepared by the World Bank that analyzes the country’s economic potential and the challenges it faces in achieving sustainable and inclusive growth.
According to the report, “Paraguay’s growth is outpacing that of the region, with an average annual growth of 3.6% between 2003 and 2023. The country has a bright future if it manages to continue transforming its economy,” said Harold Bedoya, World Bank Resident Representative in Paraguay.
“Paraguay’s achievements in recent decades are impressive. Gross national income per capita will reach $6,200 in 2023, five times more than in 1990,” said Pui Shen Yoong, World Bank Senior Economist for Paraguay and Uruguay.
“Diversifying the economy and increasing productivity are key to continuing to grow and reaching the income levels of high-income countries,” the report said.
In addition to highlighting the country’s comparative advantages, the report proposes increasing private sector productivity, generating resilience to external shocks, and managing its natural resources sustainably.
The document highlights that growth has had a direct impact on reducing poverty, which has decreased from 44.7% of the population in 2003 to 17.6% in 2023, according to the international poverty rate (US$6.85 per day per person, measured in 2017 purchasing power parity).
The solid macro-fiscal framework, including the inflation targeting regime and the Fiscal Responsibility Law, as well as improvements in access to basic education and infrastructure, are also factors in Paraguay’s success in reducing poverty.
“Growth based more on increased productivity, resilience and sustainability will give Paraguay the possibility of consistently increasing its income level in the long term,” the report states.
“If Paraguay could boost total factor productivity growth to just 0.5% per year (from zero in a baseline scenario), economic growth would accelerate over a sustained period, allowing Paraguay to reach almost 40% of the US per capita income level within 60 years,” he adds.
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2024-09-08 22:50:24
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Table of Contents
Paraguay’s Economic Growth: Unlocking its Full Potential
Paraguay, a landlocked country in South America, has made significant strides in its economic growth in recent decades. According to a report by the World Bank, titled “From a landlocked land to a land of opportunity,” Paraguay has the potential to accelerate its transition towards a high-income economy [[citation]]. The country’s natural resources, young population, and stable macroeconomic environment are its comparative advantages, which give it a bright future if it continues to transform its economy.
Economic Indicators
Paraguay’s economy has been growing at an average annual rate of 3.6% between 2003 and 2023, outpacing the region’s growth rate. The country’s gross national income per capita is expected to reach $6,200 in 2023, five times more than in 1990. In terms of economic freedom, Paraguay’s score is 60.1, making its economy the 80th freest in the 2024 Index of Economic Freedom [[1]]. The country’s nominal GDP is $41.8 billion in 2022, with a GDP per capita of $5,610 compared to the global average of $10,589 [[2]].
Challenges and Opportunities
While Paraguay has made significant progress in reducing poverty, which has decreased from 44.7% of the population in 2003 to 17.6% in 2023, the country still faces challenges in achieving sustainable and inclusive growth. The report proposes diversifying the economy and increasing productivity to reach the income levels of high-income countries. Additionally, generating resilience to external shocks and managing natural resources sustainably are crucial for Paraguay’s continued economic growth.
Private Sector Productivity
Increasing private sector productivity is key to Paraguay’s economic growth. The country needs to continue to improve its business environment and encourage investment in key sectors such as agriculture, manufacturing, and services. The government’s solid macro-fiscal framework, including the inflation targeting regime and the Fiscal Responsibility Law, has provided a stable environment for businesses to operate.
Education and Infrastructure
Improvements in access to basic education and infrastructure have also contributed to Paraguay’s success. The country needs to continue to invest in these areas to provide a skilled workforce and facilitate trade and commerce.
Trade Partners
Paraguay’s trade partners play a crucial role in its economic growth. In 2022, the country was the 96th largest economy in the world in terms of GDP (current US$), with total exports and imports of $14.6 billion and $12.3 billion, respectively [[3]]. The country’s main trade partners include Brazil, Argentina, China, and the United States.
Conclusion
Paraguay’s economic growth is a positive trend that needs to be sustained. The country’s comparative advantages, including its natural resources, young population, and stable macroeconomic environment, provide a solid foundation for its continued growth. However, Paraguay needs to address its challenges, including diversifying its economy, increasing productivity, and managing its natural resources sustainably. With continued investment in education, infrastructure, and the private sector, Paraguay can unlock its full potential and achieve sustainable and inclusive growth.
References:
[1] Heritage Foundation. (2024). Paraguay - Index of Economic Freedom.
[2] FocusEconomics. (2024). Paraguay Economy: GDP, Inflation, CPI & Interest Rates.
[3] Observatory of Economic Complexity. (2024). Paraguay (PRY) Exports, Imports, and Trade Partners.
Paraguay’s Economic Growth: A Bright Future Ahead
Paraguay, a landlocked country in South America, has been experiencing rapid economic growth over the past few decades. According to a report by the World Bank, Paraguay’s economy has been growing at an average annual rate of 3.6% between 2003 and 2023, outpacing the region’s growth rate. This growth has been driven by the country’s natural resources, a young population, and a stable macroeconomic environment.
Comparative Advantages
The World Bank report highlights Paraguay’s comparative advantages, including its abundant natural resources, a growing young population, and a stable macroeconomic environment. These advantages provide a strong foundation for the country’s economic growth and development.
Economic Growth and Poverty Reduction
The report notes that Paraguay’s economic growth has had a direct impact on reducing poverty. Poverty rates have decreased from 44.7% of the population in 2003 to 17.6% in 2023, according to the international poverty rate (US$6.85 per day per person, measured in 2017 purchasing power parity). This reduction in poverty is attributed to the solid macro-fiscal framework, including the inflation targeting regime and the Fiscal Responsibility Law, as well as improvements in access to basic education and infrastructure.
Challenges and Opportunities
Despite the country’s achievements, the report identifies challenges that need to be addressed to ensure sustainable and inclusive growth. These challenges include diversifying the economy, increasing private sector productivity, generating resilience to external shocks, and managing natural resources sustainably.
Increasing Productivity and Resilience
The report emphasizes the importance of increasing productivity and resilience to external shocks. According to the report, “growth based more on increased productivity, resilience, and sustainability will give Paraguay the possibility of consistently increasing its income level in the long term.” Additionally, the report notes that if Paraguay could boost total factor productivity growth to just 0.5% per year (from zero in a baseline scenario), economic growth would accelerate over a sustained period, allowing Paraguay to reach almost 40% of the US GDP per capita.
Paraguay’s GDP and GDP Per Capita
According to World Bank data [2[2], Paraguay’s GDP (current US$) has been steadily increasing over the years, with a growth rate of 3.6% between 2003 and 2023. In terms of GDP per capita (current US$), Paraguay’s GDP per capita has also been increasing, reaching $6,200 in 2023, five times more than in 1990 [3[3].
Conclusion
Paraguay’s economic growth has been impressive, driven by its natural resources, a young population, and a stable macroeconomic environment. The country has a bright future ahead, with opportunities to increase its income level and become a high-income economy. However, challenges need to be addressed, including diversifying the economy, increasing private sector productivity, generating resilience to external shocks, and managing natural resources sustainably. With the right policies and strategies in place, Paraguay can continue to grow and develop, becoming a land of opportunity for its citizens.
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