bilateral economic relations
Partly due to the small size of the Paraguayan market with 7.3 million potential consumers with very limited purchasing power, the volume of Spain’s exports to this South American country represented only 0.04% of sales abroad in 2021 and the customer for Spain was Paraguay with 94 . .
On the other hand, those from Paraguay to our country, highly concentrated in the agri-food sector (soy), constituted 0.01% of all Spain’s imports in the same year. However, the recent positive evolution of the Paraguayan economy is increasing the interest of Spanish companies in this market. The monetary volume of Spain’s exports to Paraguay in the January-August 2022 period reached 99,632 million Euros. According to ICEX data, sales of Paraguayans to Spain during the same period exceeded 21,409 million euros.
Spanish exports are characterized by their diversity. We export products from a variety of industries, from automobiles and pharmaceuticals to perfumery products, machinery, electrical equipment and crop products. Highlights of Paraguayan exports to Spain this year include fuels, copper products, grains, vegetable products, animal products, seeds and meat.
Paraguay’s economic structure
The primary sector occupies a very important place in Paraguay’s economic structure, accounting for just over 11% of GDP. Agriculture is supported by the existence of large stretches of fertile land that allow Paraguay to provide basic staple foods, although the supply of fruit and vegetable products is scarce and has to resort to importing them. Soybeans are the most common crop and provide a very important income. In fact, Paraguay is one of the world’s leading soybean exporters. Other important crops are sugar cane and corn. Agricultural production is the main source of Paraguayan exports, accounting for 64% of sales abroad.
Beef has become the third item in national exports in recent years, after electricity and soybeans. Paraguay has extensive pasture land suitable for large cattle ranching for meat production. Another aspect of the Paraguay primary sector is the exploitation of forest resources by exploiting the wood wealth of the eastern region, but overuse of forests has resulted in a significant loss of forest mass that limits this activity.
The industry, excluding activities such as construction, mining, electricity and water, represents 19% of the economy and is dominated by small production-oriented companies to meet the demand of the domestic market in sectors such as textile, footwear, food and beverage or furniture. . Relatively, the largest sectors belong to the cement, pharmaceutical and electrical equipment sectors. Paraguay’s Mercosur membership supports foreign investment in labor-intensive sectors such as automotive auxiliary, apparel and plastics manufacturing.
The services sector accounts for close to 47% of GDP and is dominated by small businesses belonging to commercial distribution activities. The services provided by the public sector are also related to this economic activity branch.
Job opportunities in Paraguay
Among the sectors that offer opportunities for foreign companies, those related to the agriculture and livestock sector stand out, from machinery for growing and harvesting to equipment for converting food products. This sector plays an important role in Paraguay’s economy, with raw materials such as soybeans and meat as products that make up the majority of national exports. Opportunities also exist in the pharmaceutical, chemical, wood and leather processing, automotive components and food industries.
The construction and maintenance of infrastructures can create interesting investment opportunities for Spanish companies to collaborate on public and private projects. The need to improve the quality of the country’s infrastructures is very high. However, Paraguay is well positioned to obtain favorable international credit terms, taking into account its relative level of debt and that it can very soon rely on the funds set aside to meet the contractual debt for the construction of the great Itaiupú dam, its exploitation being shared with Brazil.
There are important projects for urban sanitation and wastewater treatment in the capital city Asunción and Ciudad del Este. There are projects for the improvement of road infrastructure in these cities and the development and maintenance of highways across the country, as well as the construction of a new terminal at Asunción airport and its access by light rail. As for the energy sector, opportunities focus on hydraulic energy and renewable sources. Currently, there are some special projects going on to support the industrialization of the country, such as the construction of a factory for the production of cement in the city of Concepción, a factory for cellulose for paper and a factory for the production of biofuels. There may be opportunities to join all of the Spanish companies.
In terms of industry, labor-intensive sectors offer opportunities in activities such as textile manufacturing, footwear and leather goods, furniture and automotive industry. The Government of Paraguay provides significant tariff and financial (VAT) advantages for foreign companies wishing to invest in this market to export to the nearest countries.
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