🇵🇾 Paraguay

Paraguay is South America's most overlooked country — a landlocked nation of 7.4 million with a GDP of about $42 billion. The country is the world's fourth-largest soybean exporter and a major beef producer. Paraguay's Itaipu Dam (shared with Brazil) is one of the world's largest hydroelectric plants, and the country generates virtually 100% of its electricity from hydropower — it produces far more than it needs and sells the surplus to Brazil and Argentina. Asunción is one of South America's least-visited capitals. The country has a large informal economy, and Ciudad del Este on the Brazilian border is a massive smuggling and contraband hub.

Soybeans, beef, electricity exports, and grains are the main earners. Brazil and Argentina are the dominant trade partners. The maquila (assembly) sector has grown, with Brazilian and other companies setting up factories to take advantage of lower costs. Paraguay has one of the lowest tax burdens in the region — the corporate tax rate is 10%. GDP growth has been volatile, swinging with agricultural output and commodity prices. The informal economy is estimated at 40% of GDP.

Paraguay is one of the few countries in the Americas where an indigenous language (Guaraní) is spoken by the majority of the population — about 90% speak Guaraní, and it's co-official with Spanish. The country's Chaco region is one of the most rapidly deforested areas on earth — it's being cleared for cattle ranching at an alarming rate. Paraguay has the world's largest water reserve (the Guaraní Aquifer, shared with Brazil, Argentina, and Uruguay) beneath its territory.

Paraguay's cheap energy and low taxes are genuine competitive advantages, but the economy is too dependent on soybeans and beef. The Chaco deforestation is an environmental time bomb that could trigger trade restrictions.