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Latin American Economic Outlook 2023

Investing in Sustainable Development

image of Latin American Economic Outlook 2023

Latin America and the Caribbean needs an ambitious and comprehensive investment agenda to embark on a stronger and more sustainable development trajectory. The 16th edition of the Latin American Economic Outlook proposes ways to make this possible through co-ordinated actions by policy makers, the private sector and international partners. It argues that to close existing investment gaps and overcome the region’s structural challenges, it is essential to scale up domestic and foreign investment. These investments should be a catalyst for better quality jobs and an upgraded production structure, harnessing the potential of LAC’s endowments and of the green and digital transitions. Better governance and information are key to promoting effective and efficient public and private investments. Public institutions are fundamental to aligning investments with national development strategies while building stronger social contracts. The report presents a series of options for financing this new investment agenda, including innovative debt instruments and a renewed role for development finance institutions. The report also highlights the importance of reinvigorated international partnerships across the investment agenda.

English Also available in: Spanish

Paraguay

Poverty in Paraguay decreased from 24.0% in 2016 to 21.1% in 2022, below the Latin America and the Caribbean (LAC) average of 24.1%. Extreme poverty has remained stable at 7.9% between 2016 and 2022, but remains below the LAC average (8.3%). The Gini index decreased from 47.9 in 2016 to 42.9 in 2021 and is now below the LAC average (44.8). Regarding investment and production transformation indicators, total investment in Paraguay increased from 19.1% of GDP in 2016 to 21.8% in 2022, placing the country slightly above the LAC average of 21.3% over the same period. Private investment, however, slightly decreased, from 11.1% of GDP to 10.7%, remaining below the LAC average (15.8% in 2019). Paraguay’s labour productivity, measured against output per employed person in the United States, decreased from 22.9% in 2016 to 22.0% in 2023, below the LAC average of 27.1% in 2023. The share of exports of high-tech products in total exported manufactured goods declined marginally, from 7.6% in 2016 to 7.4% in 2021 but remains above the LAC average in 2021 (7.2%). Positive perceptions of foreign direct investment (FDI), which declined across the region, dropped in Paraguay, from 84.6% in 2016 to 55.4% in 2020. The country’s tax revenue increased from 13.4% of GDP in 2016 to 14.0% in 2021 but remains below the LAC average (21.5% of GDP). Environment-related tax revenues remained almost unchanged, declining from 1.0% of GDP in 2016 to 0.9% in 2021, positioning Panama on par with the LAC average.

English Also available in: Spanish

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