Why Paraguay is LATAM’s Rising Star for Investment

Foreign investments in Latin America are increasing rapidly. With interest and funds coming from Asia, Europe, and North America, the region and its respective economies are growing in power and size. In 2017 alone, investments in Latin America and the Caribbean reached US$161 billion. For a while, Chile was the main recipient of so much money and attention. However, there’s one country in particular that has been flying under the radar, but offers many opportunities for investors.

Paraguay is now looking to get a piece of the investment action. This landlocked South American country may seem like a quiet player in the mix, but its economy and industry potential make it an ideal place for investments. Experts are saying it is one of the top three best investment destinations in Latin America. Previous economic sluggishness rose questions of market stability and profitability. However, nowadays investors can find plenty of opportunity in a handful of different industries in the country.

Paraguay Investment Ready – Economic background

Paraguay has a complex economic history. However, since the mid 2000s, the country has been turning around their economic destiny.

Currently, the country is experiencing positive economic growth and predicts favorable market conditions to continue well into the future. A young workforce in the country right now means an innovative future ahead and ample exchange of ideas and skills. Moreover, this makes the job market more competitive, encouraging only the best of the best to get positions. Finally, it partially ensures the longevity and success of a country’s markets and keeps the market fresh and flexible.

In terms of absolute growth, Paraguay is experiencing positive economic expansion, and has been for some time. Already, the country is surpassing market growth rate predictions for the 2019 fiscal year. This points to further market potential and expansion in the future.

Good indicators for future success include the fact that the country held a fiscal surplus consecutively for the past eight years. Moreover, 26% of Paraguay’s GDP comes from international reserves. Together, these two conditions cushion Paraguay and its economy, should any international economic issues or recessions arise. They practically ‘lessen the blow’ to the overall economy. Additionally, favorable rates of return on investment attract investors. Experts say rate of return in the country can easily reach up to 30%, a no-brainer for any savvy business person.

International partnerships and agreements

Paraguay’s economic success is not acting alone. Much of the financial attraction that arrived to the country was inspired also by the country’s involvement in MERCOSUR. It is a regional trade agreement in South America, with Brazil, Argentina, Uruguay, and Paraguay serving as active members.

The trade bloc eases and encourages trade between the member and associated countries. Moreover, it works tirelessly to create agreements with the European Union and the United States.

Recently, after 20 years of discussion, the EU and MERCOSUR agreement was finalized. Now, economic activity of 770 million different people will be connected between the two regions. Tariffs, quotas, and other market barriers between the EU and MERCOSUR are eliminated for a handful of different industries. Additionally, product protection rights and rights to government contracts and bonds have changed for the better. Both aspects further open the market between the two regions and create an exciting environment for investors and adventurous business people. Paraguay should benefit greatly from this agreement.

Invest in tourism

Although not the first industry people would think to invest in in Paraguay, tourism has great potential. Previously, the tourism sector made up a minuscule part of the country’s GDP and attracted hardly any investments. However, foreign investors are now looking to build up and develop the market. Just in the last 7 years, the industry has drastically changed and received much more financing. Overall, it is growing at a rate of 6-10% annually, with over 500,000 visitors a year. In 2018, the sector did US$217 million in tourism.

Additionally, Paraguay has lots to offer in natural and cultural tourism. Developing these industries should not be a problem for businesses or investors. The obstacle to this industry is the lack of infrastructure within the country. However, with this obstacle comes opportunity for investment and development also. Construction and road work professionals and experts can find lots of work in Paraguay’s infrastructure improvement industry.

Hospitality and infrastructure

Investment in the tourism industry is growing, which prompts opportunities in off-shooting industries. Currently, investors are building up the hospitality sector by investing in hotel infrastructure. Additionally, more airline companies are adding routes to and from Paraguay. The government is currently working with Copa Airlines and Iberia to increase international connectivity to the country. Connecting with Iberia Airlines again will hopefully reconnect Paraguay to Europe and its tourist industry.

Investing in agriculture

Agriculture is a major part of Paraguay’s economy and offers many chances for investment. Currently, the country is a major exporter for Europe, Russia, and Chile. Goals to increase exportation to more of Asia and the Middle East is on Paraguay’s agenda.

Investment in agriculture in Paraguay is favorable towards foreign investors. There are no restrictions on foreign ownership, which makes the process all that more simple. Moreover, low tax rates on land encourage foreign ownership and expansion. Compared to other agricultural hubs, Paraguay also has land for sale at extremely competitive prices. Investments and startups in the agriculture and livestock industry in Paraguay prove to cost investors little and offer them multiple chances to earn as much as they can.

Explore the possibilities with a partner

Investors are just starting to expand into Paraguay, so now is the time for you and your business to get involved too. Prices, legislation, and economic conditions are perfect for foreign investors to get their foot in the door. The country offers many opportunities in the tourism and agriculture industries, along with many others.

Biz Latin Hub’s local team can help you explore and follow through on the possibilities in Paraguay. With experience in legal, financial, recruitment, and commercial representation matters, we can make your transition into the Paraguayan market a smooth and successful one. Reach out to our team for more information today.