Landlocked, sparsely populated and dependent on a narrow export base, Paraguay has spent decades on the margins of South America's economic conversation. File Photo by Andres Cristaldo/EPA
July 2 (UPI) -- Paraguay is not a country that typically commands regional headlines. Landlocked, sparsely populated and long dependent on a narrow export base, it has spent decades on the margins of South America's economic conversation. That positioning is changing, and the implications extend well beyond its borders.
Over the past three years, Paraguay has recorded average annual GDP growth of around 5.5%, well above the regional mean. In 2025 alone, the economy expanded by 6.6%, according to World Bank figures, outpacing every economy in South America except Guyana.
The International Monetary Fund projects 4.2% growth for 2026, a moderation that analysts interpret less as a slowdown than as a transition from an exceptional growth phase to a more durable trajectory.
The drivers are familiar: a competitive flat-tax structure, low public debt at 41.3% of GDP as of 2025, disciplined macroeconomic management and an agricultural sector that recovered sharply from the 2022 drought.
