Paraguay Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

Currently, the EU does not apply any safeguard measures to goods from Paraguay. Paraguay is the EU’s 104th export market in the world, in terms of imports, Paraguay ranks 74th among importers to the EU. The EU exports goods worth €74 million (2021) to Paraguay, about 90% of which are industrial goods: machinery and equipment, chemical products, means of transport, food and beverages, plastics and rubber goods. It imports products worth €48 million (2021), primarily (89%) agricultural products. The EU is the 3rd most important market for Paraguay, in terms of imports, the EU is the 4th most important trading partner.

Trade exchange with the EU

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 647.1 652.8 607.9 594.8 741.5
Imports into the EU (million EUR) 1,070.40 647.7 501.7 417.4 486.5
Balance with the EU (million EUR) 423.3 -5.2 -106.2 -177.4 -255

Source: European Commission

Trade relations with the Czech Republic

Although Paraguay is stable in many economic indicators, it is still one of the poorest countries in South America.

Trade exchange with the Czech Republic

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0 0.1 0.2 0.2 ON
Imports to the Czech Republic (billion CZK) 0.1 ON ON ON ON
Balance with the Czech Republic (billion CZK) 0.1 -0.1 -0.2 -0.1 ON

Source: businesscarriers.com

Trade relations with countries outside the EU

Paraguay is part of the MERCOSUR association and at the same time a neighbor of the large economies of Brazil and Argentina. Foreign trade is thus connected precisely with these countries.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 10,739.8 11,018.1 10,188.7 9 175.1 10,935.0
Imports to countries outside the EU (million EUR) 8,725.2 10,332.2 9,911.6 8,112.5 9,631.9
Balance with non-EU countries (million EUR) 2,014.7 685.9 277.2 1,062.6 1,303.1

Source: EIU, Eurostat

Foreign direct investment

Paraguay is one of the fastest growing economies in Latin America. Despite solid growth and good macroeconomic indicators, foreign direct investment flows remain low. Since 2004, they have averaged 1.3% of GDP per year, which is significantly below the regional average. There are no significant investments by Czech entities in the country.

FTAs and treaties

Treaties with the EU

The EU does not have a preferential trade agreement with Paraguay. Currently, the EU does not apply any safeguard measures to goods from Paraguay.

Contracts with the Czech Republic

Since 1998, the Czech Republic has had a valid agreement with Paraguay on the support and mutual protection of investments. Since 2018, the two states have been negotiating an agreement on economic and industrial cooperation.

Developmental cooperation

Considering its economic and social reality, Paraguay is a net recipient of foreign development aid, the amount of which varies between 300-500 million USD per year. The sources are multilateral institutions (World Bank, EU), states (the largest donors are the USA and Germany) and non-governmental organizations (e.g. Oxfam). Most aid goes to the following areas: agriculture, small farms and farming of indigenous people, development of human capital, reduction of inequality and poverty, support of democratic institutions, support of women’s entrepreneurship and prevention of violence against women.

The Czech Republic has been providing development aid to Paraguay for several years. In 2021, through the Embassy of the Czech Republic in Buenos Aires, he is implementing a project focusing on the development of an agricultural school for youth in the Belén area. In 2022, the Czech Republic will provide financial assistance for the reconstruction of three rural schools.

Paraguay is also among the recipients of EU development aid, which allocated EUR 168 million for these purposes for the period 2014-20. With regard to the development problems that the country is facing, the largest part of the aid goes to the following areas: human capital development and education, improvement of the business environment, social inclusion, strengthening of democratic institutions and prevention of violence and crime.

Prospective fields of study (MOP)

Paraguay is economically and financially among the most stable countries in South America. Export opportunities are supported by low tax costs and cheap labor. There is a so-called maquila system in the country, a large part of exports goes through this system. It is a production system where companies based in Paraguay produce or service goods (in whole or in part) on the basis of a contract with a foreign company. Goods produced in this way must not remain in the country, they are intended for export. In addition, capital goods imports enter the country with zero duty. The registration process in Paraguay is relatively easy. However, the purchasing power of Paraguayans is relatively low.

Energetics

Paraguay is one of the main producers of renewable energy in the world. Hydroelectric plants produce more electricity than Paraguay’s consumers consume. Household consumption increases with economic growth. However, investments in transmission and distribution networks are still necessary.

Agriculture

The country has great potential in agriculture, 55% of its area is covered by arable land. Up to 40% of Paraguayan exports are agricultural products. Agriculture and related industries make up a substantial part of GDP (30%). However, the application of new technologies in agriculture is a big challenge for Paraguay, despite the mentioned dependence on agriculture, it does not invest much in this area.

Paraguay Trade