Paraguay Systematic Country Diagnostic
Paraguay has been characterized by solid economic growth, strong poverty reduction and macroeconomic stability in recent years. An adjustment of the development model, however, should increase sustainability and inclusiveness in the future. Economi...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/827731530819395899/Paraguay-Systematic-Country-Diagnostic http://hdl.handle.net/10986/30053 |
| Summary: | Paraguay has been characterized by solid
economic growth, strong poverty reduction and macroeconomic
stability in recent years. An adjustment of the development
model, however, should increase sustainability and
inclusiveness in the future. Economic growth has been above
the regional average. Macroeconomic stability has been
achieved; inflation is under control and public debt is low.
Poverty reduction has been substantial, and several social
indicators have shown significant improvements. Apart from
solid macroeconomic policy, growth has been based on
extensive leveraging of the country’s natural wealth,
particularly land and hydroelectric potential. Demographic
change in Paraguay has also led to a sizable expansion of
the working-age population, adding to economic output.
However, if the current model is adjusted, the
sustainability of these achievements could be increased
substantially, since two of the main sources of growth in
the past decade (natural capital and the demographic bonus)
will slowly reduce their contribution to growth. These
adjustments should focus on overcoming the main obstacles
that this report identified as critical challenges for a
sustainable development: (a) concentration of inputs,
production, exports, income, and political influence; (b)
prevalence of informal economic relations; and (c) delivery
of public services. To meet the population’s expectations,
higher growth is needed, but, even more importantly, this
growth needs to become inclusive and sustainable in the
medium- and long-term. The pathways toward this goal will
need to overcome the mutually reinforcing challenges
mentioned above. To that end, the SCD has identified the
following priority areas: accountable institutions, rule of
law, and business environment; natural wealth management;
quality of public services; and human capital. |
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