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In a remarkable turnaround, Paraguay has significantly reduced its poverty rate from over 50% in 2005 to 16% by 2025. This substantial decline has lifted around 300,000 individuals out of poverty in just the past two years, according to a World Bank analysis published in April 2026. The report attributes this achievement primarily to growth in labor income, particularly benefiting those at the lower end of the income spectrum.
Geographical advantages, such as the Itaipu and Yacyreta hydroelectric dams, have provided Paraguay with access to abundant, affordable, and clean electricity. This energy source not only supports manufacturing but also attracts investment in green industries, a unique benefit for a landlocked nation. In addition, investments in infrastructure, including improved road networks, riverine ports, and enhanced digital connectivity, have facilitated the movement of goods and information, further bolstering economic growth.
Policy reforms have played a critical role in this progress. The introduction of a new law that automates registration for small and medium enterprises, along with flexible labor contracts, has simplified the process of operating formally. The modernization of the maquila regime, which incentivizes manufacturing, has been extended, allowing for a broader base of formal employment. These changes, accompanied by a new Investment Law and a revamped public-private partnership framework, have led to Paraguay earning two investment-grade credit ratings within 18 months, a notable achievement for any country in Latin America.
In addition to economic reforms, Paraguay’s Hambre Cero (Zero Hunger) program has made a significant impact on child nutrition. Serving over one million children in public schools, the initiative sources food from local family farmers and small businesses, ensuring that assistance not only addresses hunger but also supports local economies. A real-time administrative system allows for effective monitoring of the program’s performance.
Despite the overall decline in poverty, some regions, such as Caaguázú, Caazapá, and San Pedro, continue to experience higher-than-average poverty rates. To address these disparities, Paraguay has developed its first comprehensive poverty map in over two decades, identifying specific gaps at the district level. This targeted approach ensures that resources are allocated efficiently, maximizing the impact of programs like Hambre Cero.
As Paraguay continues to build on its recent successes, the focus remains on addressing the needs of the most vulnerable populations, ensuring that the benefits of economic growth are shared more evenly across the nation.
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