Economy Type
**Hydropower & Agro-Export Emerging Economy
(Emerging economies focused on hydropower and agricultural exports)**
Paraguay is classified as a Hydropower & Agro-Export Emerging Economy .
This is because the country is a global exporter of soybeans, beef, and agricultural products, and produces hydroelectric power exceeding domestic demand through the Itaipu Dam, jointly operated with Brazil, and the Yasireta Dam, jointly operated with Argentina. Abundant and relatively inexpensive clean electricity serves as a key foundation for transitioning the agriculture-centered economy into one centered on manufacturing, data centers, and green industries.
Although the Paraguayan economy is sensitive to agricultural climate and international raw material prices, it maintains a steady growth trend based on macroeconomic stability and private consumption and investment. The IMF projected real GDP growth at 5.3% in 2025 and 3.8% in 2026.
Country Definition
Paraguay is a landlocked South American country that is transforming into a manufacturing and logistics hub by exporting soybeans, beef, and hydroelectric power, while utilizing low-cost electricity, the Maquila Islands, and South American inland waterways.
Why It Matters
Although Paraguay is a landlocked country, it is connected to Atlantic ports via the Paraguay–Parana waterway. This waterway is a key component of the national supply chain, transporting grain, meat, fuel, and industrial products to ports in Argentina and Uruguay.
Furthermore, as a member of the Southern Common Market (MERCOSUR), it is institutionally connected to the markets of Brazil, Argentina, and Uruguay. Low electricity costs, a relatively simple tax system, and the Maquila export processing system are being utilized to attract industries such as automotive parts, textiles, plastics, electrical products, and agri-food processing.
Korea Perspective
For South Korea, Paraguay is a supplier of soybeans, meat, feed, and agricultural products, as well as a growth market capable of supplying agricultural machinery, automotive parts, power equipment, processing machinery, and digital infrastructure.
Korean companies can explore maquila production, agri-food processing, electric vehicle components, clean power-based industries, and inland logistics businesses targeting not only the Paraguayan domestic market but also the South American region, including Brazil and Argentina.
Key Keywords
- Hydropower
- Soybean & Beef
- Itaipú
- Paraguay–Paraná Waterway
- Maquila
- MERCOSUR
- Agro-Industry
- Green Manufacturing
- Landlocked Logistics
- Korea–South America Cooperation
Paraguay is a landlocked country located in central South America, sharing borders with Brazil, Argentina, and Bolivia. Population and industry are concentrated in the capital, Asunción, and the eastern region, while the western Chaco region has a large territory but a low population density.
According to IMF data, the population is estimated to be approximately 6.46 million in 2026. Spanish and Guarani are official languages, and Guarani culture and language have a significant influence on national identity.
The political system is a presidential system. The conservative Colorado Party has maintained political influence for a long time, and while policy continuity is relatively high, administrative efficiency, judicial trust, corruption, and the informal economy remain areas for improvement.
Diplomatically, it has deep economic ties with Brazil and Argentina and cooperates with the United States, the European Union, and Taiwan. As the only country in South America to maintain official diplomatic relations with Taiwan, Paraguay holds strategic significance amidst the diplomatic rivalry between Taiwan and China.
Key Features
- A landlocked country between Brazil, Argentina, and Bolivia
- Spanish-Guarani bilingual society
- Agriculture, livestock, and hydroelectric power-centered economy
- MERCOSUR member states
- Young population structure and low labor costs
- Concentration of population and industry in the eastern region
- Maintaining official diplomatic relations with Taiwan
Paraguay has grown based on relatively stable monetary and fiscal policies and agricultural and livestock exports. According to the World Bank, per capita income increased by an annual average of 2.4% from 2004 to 2024, recording a higher performance than many Latin American countries.
In 2025, the service sector, manufacturing, private consumption, and investment supported growth. The IMF projected that economic activity would remain robust in 2026 based on low prices, employment, and reform policies, but that the growth rate would moderate compared to the previous year.
The economic structure relies heavily on agriculture and hydropower, making it sensitive to droughts, floods, and the prices of soybeans, corn, and meat, as well as river levels. Informal employment, low productivity, disparities in education and healthcare, and inadequate road and logistics infrastructure also remain ongoing challenges.
Market characteristics
- Open economy centered on agriculture and hydropower
- Relatively low tax rates and production costs
- young workforce and growing middle class
- Reliance on imported consumer goods, machinery, and vehicles
- Consumer market centered on Asunción and Ciudad del Este
- The proportion of informal distribution and cash transactions is large.
- Economic fluctuations due to climate and agricultural product prices
MarketHub Point
Paraguay is in the process of transitioning from a simple agricultural nation to a manufacturing and processing nation utilizing low-cost clean electricity and maquila.
Paraguay's major industries are soybeans, corn, wheat, rice, and livestock farming. The World Bank assesses Paraguay as a major global exporter of agricultural and livestock products, such as soybeans and beef.
Soybeans can be linked from seed production to pressing, feed, and biofuel, but the current economy relies heavily on the export of raw materials and primary processed products. The beef industry is connected to overseas markets such as Brazil, Chile, Russia, and Taiwan, and competitiveness is determined by capabilities in slaughtering, freezing, quarantine, and traceability management.
The core of the energy sector is the Itaipu and Yacireta hydroelectric power plants. Paraguay sells the hydroelectric power it produces that is not used domestically to Brazil and Argentina. However, the domestic transmission and distribution network and the utilization of industrial power have not developed sufficiently compared to the volume of electricity produced. The World Bank analyzes that while most of Paraguay's energy exports are hydroelectric, its energy imports rely on fossil fuels such as diesel.
The maquila industry operates on a structure where raw materials are imported from overseas, processed and assembled in Paraguay, and then exported. It is utilized in the fields of automotive wiring, electrical wires, textiles and clothing, plastics, leather, food, and household goods, with the eastern border region adjacent to the Brazilian market serving as a major production hub.
Key industries
- Soybean and grain farming
- Beef and livestock
- hydroelectric power
- Agri-food and feed processing
- Automotive parts and wires
- Textiles, clothing, and leather
- Plastics and packaging materials
- Construction, Distribution, Finance
- Inland waterway and logistics
Key resources
- Fertile agricultural land
- Soybeans, corn, and wheat
- Beef and meat
- Paraguay River and Paraná River
- Large-scale hydroelectric power
- Forests and Biodiversity
- young workforce
MarketHub Point
Paraguay's greatest industrial opportunity lies in moving away from exporting agricultural products and electricity as is, and increasing added value through food, materials, components, and green manufacturing.
Paraguay's major exports are soybeans, soybean meal and soybean oil, beef, electricity, corn, rice, and leather. Imports are centered on petroleum products, automobiles, machinery, electrical and electronic products, chemical products, pharmaceuticals, and consumer goods.
According to the WTO, Paraguay's simple average most favored nation applied tariff rate in 2024 was 8.6%, and goods imports in 2025 were estimated at approximately $19.1 billion.
Brazil and Argentina are the largest economic partners. Chile is a major export market for agricultural and livestock products, such as beef, while China is a major supplier of imports. However, a unique characteristic of Paraguay's trade and investment structure is that it lacks official diplomatic relations with China, as it maintains diplomatic ties with Taiwan.
As a landlocked country, Paraguay relies heavily on the Paraguay–Parana waterway. When river levels drop, vessel cargo capacity and operational efficiency decrease, directly impacting export freight rates and the competitiveness of agricultural products. The World Bank assesses that hydroelectric power, water transport, and agriculture all depend on the stable water resources of the La Plata River basin.
Major trading and partner countries
- brazil
- Argentina
- Chile
- china
- USA
- Uruguay
- taiwan
- European Union
- korea
Supply chain characteristics
- Paraguay–Parana Inland Waterway Center
- via ports in Brazil and Argentina
- Exports centered on agricultural products and electricity
- Dependence on imports of machinery, fuel, vehicles, and electronic products
- Logistics sensitive to river levels and climate
- Utilizing the MERCOSUR regional market
- Development of border trade and re-export markets
MarketHub Point
In Paraguay, inland transportation, customs clearance, river levels, and the logistics structure to ports in Brazil and Argentina determine ultimate competitiveness, rather than factory production costs.
The Paraguayan market is suitable for businesses that combine agriculture, livestock, power, manufacturing, and logistics. There is demand for agricultural machinery, irrigation, seeds, fertilizers, smart farms, and grain storage, sorting, and drying equipment, with large-scale agricultural enterprises and cooperatives serving as key customers.
In the livestock sector, animal feed, veterinary pharmaceuticals, slaughtering and processing facilities, refrigeration and freezing, and packaging and traceability systems are promising. Raising the quality and quarantine standards of agricultural and livestock products can expand exports to Asian and Middle Eastern markets.
Automotive parts, battery materials, power cables, data centers, green hydrogen, and low-carbon manufacturing utilizing hydroelectric power also represent mid-to-long-term opportunities. However, for low generation costs to translate into actual industrial competitiveness, they must be supported by transmission and distribution networks and a stable power supply.
The maquila business can be utilized for production targeting MERCOSUR markets such as Brazil, but rules of origin, taxation, logistics, and local procurement conditions must be reviewed in advance.
Key Opportunities
- Farm machinery, irrigation, and smart farming
- Grain storage, drying, and processing
- Slaughter, Meat Processing, Cold Chain
- Automotive parts, wires, and electronic assemblies
- Solar power, transmission and distribution, and substation facilities
- Data center and power-intensive industries
- Biofuel and biomass
- Inland Port, Warehouse, and Logistics System
- Medical devices and pharmaceuticals
- e-government, fintech, and telecommunications
Major Risks
- High dependence on agriculture and climate
- Logistics costs and port accessibility in landlocked countries
- Lack of road and power transmission infrastructure
- The informal economy and tax evasion
- Uncertainty in administrative and customs procedures
- Land Concentration and Social Inequality
- Strengthening of forest destruction and environmental regulations
- Lowering of river levels and drought
- dependence on Brazil and Argentina's economy
Paraguay's economy is expected to continue growing in 2026, driven by consumption, investment, services, and manufacturing. The IMF forecasts that growth will normalize to 3.8% in 2026 following a high growth rate of 5.3% in 2025, and assesses that macroeconomic stability and structural reforms will support growth in the medium term.
The key to future industrial transformation is the domestic utilization of hydroelectric power. Moving away from the current structure centered on electricity exports and attracting agricultural processing, automotive parts, data centers, batteries, electrification, and green industries can expand employment and added value.
In the agricultural and livestock industries, irrigation, soil management, genetic resources, traceability, forest conservation, and low-carbon certification will become more important than increasing production volume. As forest and carbon regulations in major markets, such as the European Union, are strengthened, managing origin and environmental information in the soybean and beef supply chains may become essential.
Climate change is the greatest structural risk. As agriculture, hydroelectric power, and inland waterways all depend on precipitation and water resources, droughts or floods can simultaneously affect production, electricity, and logistics.
Changes to Watch Out For in the Future
- Itaipu Electricity Price and Operation Negotiations
- Domestic industrial utilization of hydroelectric power
- Expansion of maquila manufacturing
- Environmental and Traceability Regulations for Agricultural and Livestock Products
- Paraguay–Parana Waterway Improvement
- Investment in power transmission, distribution, roads, and inland ports
- Brazil-Argentina match changes
- Taiwan-China diplomatic relations variable
- Attracting data centers and green industries
Market Position
Hydropower-Based Agro-Industrial Gateway
A market transforming from a South American agricultural exporting country into a manufacturing and processing hub by leveraging abundant agricultural and livestock resources, hydroelectric power, the Maquila Islands, and inland waterways.
Key Opportunities
- Soybean, Grain, and Feed Supply Chain
- Beef, Meat Processing, Cold Chain
- Agricultural machinery and smart farming
- Hydropower-based green manufacturing
- Automotive parts and electrical/electronic assembly
- Transmission, Distribution, Substation, and Energy Storage
- Inland Port and Logistics Automation
- Data Centers and Digital Infrastructure
- Biofuels and low-carbon agriculture
Recommended Strategy
Observe
We continuously monitor soybean and meat prices, river levels, the Itaipu negotiations, the Maquila policy, Taiwan-China relations, and changes in MERCOSUR trade.
↓
Prepare
Establish a regional market strategy that includes Brazil and Argentina, and build local partnerships with agricultural companies, maquila operators, and logistics companies.
↓
Participate
Participation is phased in the fields of agricultural product processing, automotive parts, power facilities, smart agriculture, and inland logistics, starting with small-scale production and processing or joint demonstration projects.
Final Assessment
Based on its distinct comparative advantages in agricultural products and hydroelectric power, Paraguay is a country with high potential to grow into a low-cost manufacturing, processing, and logistics hub in South America.
Scope of investigation
This material was compiled by cross-referencing international organizations, the Paraguayan government and trade agencies, and publicly available economic and trade data.
international organizations
- International Monetary Fund
- World Bank
- World Trade Organization
- Inter-American Development Bank
- ECLAC
Paraguayan government and public institutions
- Government of Paraguay
- Ministry of Economy and Finance
- Central Bank of Paraguay
- Ministry of Industry and Commerce
- REDIEX
- National Customs Directorate
- Itaipú Binacional
- National Electricity Administration
Key verification data
- IMF Paraguay Sixth Review, 2026
- IMF Paraguay Country Data and Outlook
- World Bank Paraguay Overview
- World Bank Paraguay Country Economic Memorandum
- WTO Paraguay Trade and Tariff Profile
- WTO Paraguay Trade Policy Review 2024
- World Bank Paraguay Energy and Climate Data
- Public data related to Paraguay Maquila, investment, and logistics
Writing Verification
This document was written based on the following criteria.
- Applying the table of contents order of the WCI-001 Golden Template
- Maintain from 0. Country Summary to 8. References & Writing Verification
- Reflecting economic, trade, and industrial data for 2024–2026
- Priority use of data from international organizations and government agencies
- Reflecting national characteristics centered on agriculture, livestock, hydroelectric power, and inland logistics
- Application of South Korea's Manufacturing, Agriculture, and Energy Cooperation Perspective
- In fact, distinguish between forecasts and MarketHub's judgments.
- Maintain an appropriate amount tailored to national importance
Although Paraguay is a landlocked country, it is a major South American exporter of agricultural and livestock products, connected to the global market through soybeans, beef, hydroelectric power, and the Paraguay–Parana waterway.
The nation's greatest competitive advantages are agricultural land and affordable, clean electricity. However, it is difficult to sufficiently increase productivity, employment, and national income with a structure that relies solely on exporting soybeans, meat, and electricity as raw materials. A transition is necessary to utilize electricity domestically for agri-food processing, automotive parts, electrical and electronics, data centers, and green industries.
The geographical limitation of being a landlocked country poses the greatest supply chain risk to Paraguay's economy. Since logistics costs and delivery times vary depending on river levels, roads, customs clearance, and ports in neighboring countries, production and export must be designed as a single supply chain.
South Korea needs to evaluate Paraguay not merely as a supplier of agricultural products, but as a hub for cooperation in South America that combines agricultural technology, processing, energy, manufacturing, and logistics.
Agricultural machinery, meat processing and cold chain, automotive parts, power facilities, smart logistics, and digital infrastructure are sectors where Korean companies can demonstrate competitiveness. In particular, regional projects targeting MERCOSUR markets, such as Brazil, by leveraging the Maquila system and hydroelectric power are effective.
Final evaluation
Paraguay is an emerging market with high potential to develop into a hub for green manufacturing, agri-food processing, and inland logistics in South America, based on its agricultural and livestock resources, hydroelectric power, and maquila systems.