In a recent survey conducted by the Getulio Vargas Foundation (FGV), Paraguay has emerged as the leader in Latin America’s Economic Climate Index (ICE), closing 2024 with an impressive 153.9 points. This marks a significant improvement from the previous quarter, where the country scored 145 points. The ICE measures the overall business environment, considering factors like economic stability, investor confidence, and the ease of conducting business. Paraguay’s top ranking highlights its status as the best destination for local and international regional investments.
Paraguay’s Dominance in Business Climate
Paraguay’s prominent position in the business climate index in Latin America reflects its economic stability and attractive environment for business development. The country’s score of 153.9 points, representing a gain of 8.9 points from the third quarter of 2024, reinforces its favorable position as a business hub in Latin America. Among the 10 countries evaluated, Paraguay stands at the top and continues to outpace its regional counterparts regarding economic climate.
This top ranking is no coincidence. Paraguay’s business-friendly policies, low tax rates, and political stability have contributed to its appeal as a destination for foreign direct investment (FDI). Investors are particularly drawn to the country’s transparent regulatory framework and relatively low operating costs, which make it a competitive choice for business expansion.
The Broader Latin American Context
Following Paraguay, Argentina ranks second in the business climate index in Latin America with 125.9 points, while Peru holds third place with a score of 120 points. Uruguay, Brazil, Chile, and other countries in the region follow with varying levels of investor confidence and economic stability. For instance, Brazil’s score of 85 points and Chile’s score of 69.4 reflect a marked difference from Paraguay’s leading position.
Overall, the region saw a decline in its business environment. Latin America closed 2024 with an average score of 77.9 points, which is 6.2 points lower than the previous year. This decline underscores the challenges many countries face in maintaining favorable conditions for business amid economic volatility, political instability, and other external factors.
Despite these challenges, Paraguay has remained resilient, and its consistent leadership in the business climate index in Latin America signals a strong foundation for continued growth and development.
Paraguay’s Business Environment: Key Drivers of Success
Several factors have contributed to Paraguay’s strong Latin America business climate index performance. First, the country’s stable macroeconomic environment, characterized by low inflation and manageable public debt, provides a favorable backdrop for business operations. The absence of major political or social upheavals further enhances the country’s attractiveness as an investment destination.
Paraguay’s relatively small size and efficient bureaucracy make it easier for businesses to navigate the regulatory landscape. The country has made significant strides in reducing the time and cost associated with starting a business, a key indicator of business climate quality. Moreover, the government’s commitment to improving infrastructure and enhancing connectivity with regional markets has further solidified Paraguay’s position as an economic leader in Latin America.
The agricultural sector, a cornerstone of the Paraguayan economy, is also crucial in shaping the country’s positive business environment. Paraguay has established itself as a key player in global supply chains with a strong export profile, particularly in soybeans, beef, and other agricultural products. This sector’s growth has bolstered the country’s overall economic performance and contributed to its impressive business climate score.
Forecasts for Paraguay’s Economic Growth in 2025
Looking ahead, the outlook for Paraguay in 2025 remains positive despite ongoing risks, such as the drought that has affected the agricultural sector. The Central Bank of Paraguay (BCP) forecasts an economic expansion of 3.8% for the year, reinforcing the country’s position as one of the fastest-growing economies in the region. Strong domestic demand, infrastructure development projects, and the continued attractiveness of Paraguay as a destination for foreign investment support this growth trajectory.
The country’s impressive performance in the business climate index in Latin America positions it well for future growth. However, challenges remain, particularly in managing environmental risks like drought and ensuring the continued diversification of the economy. To maintain its standing as a top business destination, Paraguay will need to adapt to these challenges while continuing to foster a supportive environment for business development.
Conclusion: A Beacon for Investment in Latin America
Paraguay’s leadership in the business climate index in Latin America reflects its successful efforts to create an environment conducive to economic growth and investment. As the country continues to focus on improving its infrastructure, maintaining economic stability, and fostering a favorable business climate, it will likely maintain its position as the region’s top destination for investment.
The positive economic forecasts for 2025 and Paraguay’s strong performance in the business climate index highlight the country’s bright prospects for the future. As Latin America continues to navigate economic challenges, Paraguay stands out as a beacon of opportunity for businesses looking to expand. Its stability, growth potential, and investor-friendly policies make it a model for other countries striving to improve their business climate and attract international investment.
In conclusion, Paraguay’s position as the leader in the business climate index in Latin America is a testament to its current success and a strong indication of the country’s bright economic future. With continued commitment to fostering a positive business environment, Paraguay is poised to remain a regional leader in attracting investment and driving economic growth.