Paraguay has not experienced significant macroeconomic imbalances for the past two decades, mainly due to prudent fiscal management. While the COVID-19 pandemic increased the budget deficit and public debt, these figures remain relatively low compared to the rest of the region, standing at 2.6 percent and 40.2 percent, respectively, in 2024.
However, Paraguay faces the challenge of improving the quality and quantity of spending on essential public services and infrastructure, which are critical for creating better job opportunities. Approximately 62 percent of the workforce is engaged in informal employment, disproportionately affecting women and young people. Additionally, Paraguay is highly vulnerable to extreme weather events, such as droughts, which have hindered economic growth and slowed poverty reduction.