The Paraguayan government has implemented various policies aimed at fostering a more attractive climate for business and investment. Trade liberalization efforts have reduced tariffs and non-tariff barriers through free trade agreements, improving export competitiveness and access to imports. This enhances opportunities for companies operating in Paraguay. Tax incentives are also utilized to attract foreign capital and boost private sector participation across priority industries and regions. Special economic zones and one-stop shops for investors streamline procedures…government policies play an important role in shaping Paraguay’s attractiveness as a destination for business and investment. The country has pursued pro-market reforms to diversify its economy and support the private sector.
The impact of government policies on Paraguay’s business environment has been significant, with the country averaging 4.1% growth between 2003 and 2019, while maintaining low public and external debt, and low and stable inflation. The government has pursued business-friendly policies, and the major drivers of economic growth in Paraguay are the agriculture, retail, and construction sectors. The country has experienced a decline in poverty, with nearly 1 million Paraguayans lifted out of poverty since 2011, primarily due to high rates of economic growth and job creation. However, Paraguay still faces challenges, as reflected in its ranking of 125 out of 190 countries in the Ease of Doing Business Report and its position as one of the poorest countries in Latin America with high inequality and sub-standard infrastructure.
The Paraguayan government’s encouragement of private foreign investment has contributed to the country’s economic growth. The government’s pursuit of business-friendly policies and its efforts to modernize public institutions, increase government effectiveness, strengthen governance, control corruption, and improve the business climate have fostered the conditions for sustained economic growth. Paraguay’s stable macroeconomic environment and competitive labor costs have made it one of the most open and dynamic economies in Latin America and the Caribbean, presenting foreign investment opportunities in various sectors, including textiles, food and agriculture, pharmaceuticals, auto parts, and knowledge-based digital services.
Despite the government’s efforts to improve the business environment, challenges such as corruption, poor rule of law, and a fragile business environment persist. The government’s commitment to structural reforms and modernization is essential to address these challenges and further enhance the business climate. Strengthening international promotion efforts, simplifying import and export processes, and supporting small and mid-sized firms in their efforts to expand to international markets are recommended to make the most of the foreign investment opportunities in Paraguay.
