Paraguay has been characterized by solid economic growth, strong poverty reduction and macroeconomic stability in recent years. An adjustment of the development model, however, should increase sustainability and inclusiveness in the future. Economic growth has been above the regional average. Macroeconomic stability has been achieved
inflation is under control and public debt is low. Poverty reduction has been substantial, and several social indicators have shown significant improvements. Apart from solid macroeconomic policy, growth has been based on extensive leveraging of the country's natural wealth, particularly land and hydroelectric potential. Demographic change in Paraguay has also led to a sizable expansion of the working-age population, adding to economic output. However, if the current model is adjusted, the sustainability of these achievements could be increased substantially, since two of the main sources of growth in the past decade (natural capital and the demographic bonus) will slowly reduce their contribution to growth. These adjustments should focus on overcoming the main obstacles that this report identified as critical challenges for a sustainable development: (a) concentration of inputs, production, exports, income, and political influence
(b) prevalence of informal economic relations
and (c) delivery of public services. To meet the population's expectations, higher growth is needed, but, even more importantly, this growth needs to become inclusive and sustainable in the medium- and long-term. The pathways toward this goal will need to overcome the mutually reinforcing challenges mentioned above. To that end, the SCD has identified the following priority areas: accountable institutions, rule of law, and business environment
natural wealth management
quality of public services
and human capital.