<hdr>The World Factbook 1994: Paraguay<nl>Economy</hdr><body>
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<item><hi format=bold>Overview:</hi> Agriculture, including forestry, accounts for about 25% of GDP, employs about 45% of the labor force, and provides the bulk of exports, led by soybeans and cotton. Paraguay lacks substantial mineral or petroleum resources but possesses a large hydropower potential. Since 1981 economic performance has declined compared with the boom period of 1976-81, when real GDP grew at an average annual rate of nearly 11%. During the period 1982-86 real GDP fell in three of five years, inflation jumped to an annual rate of 32%, and foreign debt rose. Factors responsible for the erratic behavior of the economy were the completion of the Itaipu hydroelectric dam, bad weather for crops, and weak export prices for agricultural commodities. In 1987 the economy experienced a minor recovery because of improved weather conditions and stronger international prices for key agricultural exports. The recovery continued through 1990, on the strength of bumper crops in 1988-89. In a major step to increase its economic activity in the region, Paraguay in March 1991 joined the Southern Cone Common Market (MERCOSUR), which includes Brazil, Argentina, and Uruguay. In 1992, the government, through an unorthodox approach, reduced external debt with both commercial and official creditors by purchasing a sizable amount of the delinquent commercial debt in the secondary market at a substantial discount. The government had paid 100% of remaining official debt arrears to the US, Germany, France, and Spain. All commercial debt arrears have been rescheduled. For the long run, the government must press forward with general, market-oriented economic reforms. Growth of 3.5% in 1993 was spurred by higher-than-expected agricultural output and rising international commodity prices. Inflation picked up steam in fourth quarter 1993 because of rises in public sector salaries and utility rates.
<item><hi format=bold>National product:</hi> GDP—purchasing power equivalent —$15.2 billion (1993 est.)
<item><hi format=bold>National product real growth rate:</hi> 3.5% (1993 est.)
<item><hi format=bold>National product per capita:</hi> $3,000 (1993 est.)
<item>• <hi format=ital>consumption per capita:</hi> 3,280 kWh (1992)
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<item><hi format=bold>Industries:</hi> meat packing, oilseed crushing, milling, brewing, textiles, other light consumer goods, cement, construction
<item><hi format=bold>Agriculture:</hi> accounts for 26% of GDP and 44% of labor force; cash crops—cotton, sugarcane, soybeans; other crops—corn, wheat, tobacco, cassava, fruits, vegetables; animal products—beef, pork, eggs, milk; surplus producer of timber; self-sufficient in most foods
<item><hi format=bold>Illicit drugs:</hi> illicit producer of cannabis for the international drug trade; important transshipment point for Bolivian cocaine headed for the US and Europe
<item><hi format=bold>Economic aid:</hi>
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<item>• <hi format=ital>recipient:</hi> US commitments, including Ex-Im (FY70-89), $172 million; Western (non-US) countries, ODA and OOF bilateral commitments (1970-89), $1.1 billion
