In 2008, Heritage Foundation's Index of Economic Freedom assessed Paraguay to be the world's 77th freest economy. Areas like business freedom and property rights are improving for Paraguay. In terms of economic freedom, out of 29 countries in Americas, Paraguay is ranked sixteenth. In 2008, Heritage Foundation assessed Paraguay to be a 60.5 percent free economy.
Economic freedom of Paraguay
Fiscal strength and government size contribute significantly to Paraguay's economic freedom. Low income and corporate taxes in Paraguay attract investors to the country. Government spendings are low in Paraguay. Starting a new business in Paraguay is difficult because of bureaucratic regulations.
According to CIA's World Factbook, Paraguay's GDP stood at around $26.7 billion in 2007. That was an overall growth of 6.6. percent over GDP figures for previous year. Sector-wise breakup of Paraguay's GDP showed that services accounted for nearly 60 percent of total GDP, followed by other sectors like agriculture and industry. In 2007, GDP per capita was about $4000.
In 2007, inflation in Paraguay was around 8.1 percent. High inflation is a challenge that Paraguayan government needs to meet. Most prices in Paraguay are determined by market forces. But fuel prices are controlled by the Paraguayan government.
Imports and exports
In 2007, CIA estimates indicated that Paraguay imports were worth about $6.094 billion. Commodities like road vehicles, tobacco, petroleum products, consumer goods, and electrical machinery. Brazil and US accounted for more than 40 percent of Paraguay's imports.
In 2007, Paraguay's exports were worth about $5.463 billion. Major export commodities were soybeans, cotton, meat, wood, leather, and edible oils. Paraguay's exported commodities to countries like Uruguay, Brazil, Russia, Argentina, and Chile.
Some weaknesses of Paraguay's economy include factors like corruption, little or not structural reforms, and inefficient infrastructure. Though property rights is improving, judicial corruption continues to an impediment to better economic freedom in Paraguay. Restrictive labor freedom further challenges Paraguay's economic freedom.
Future of ParaguayvFuture of Paraguay depends a lot on how the country improves its infrastructure and judicial system. Oil and gas exploration has attracted finance from UK and will prove beneficial for Paraguay's economy.