Income poverty in Paraguay has fallen significantly over the past two decades, but the economic vulnerability of households just above the poverty line remains high, according to an analysis by the organization PRODesarrollo. The study points out that shocks such as illness, job loss, or indebtedness can quickly reverse the gains achieved.
According to the National Institute of Statistics (INE), the incidence of total poverty fell from 46% in 2002 to approximately 16% in 2025. The extreme poverty line in 2025 was set at G. 933,108 per capita per month for urban areas and G. 681,839 for rural areas. However, PRODesarrollo highlights that a significant portion of the population is concentrated at income levels close to these thresholds, making these households susceptible to shocks.
“Official poverty measurement is based on income and establishes a threshold: those who do not reach it are considered poor. The problem is not the threshold itself, but what happens around it,” the organization states. “Small shocks — such as illness, job loss, indebtedness, or an increase in the cost of living — can push many households back into deprivation.”
The labor market reinforces this fragility. According to the INE, about six out of every ten employed people in Paraguay are in informality. A significant proportion of informal salaried workers earn below the minimum wage, meaning that even if they surpass the poverty line, these workers lack stability and social protection.
The productive structure also contributes to the scenario. According to the Ministry of Industry and Commerce (MIC), micro, small, and medium-sized enterprises represent approximately 98% of the country's economic units and concentrate between 70% and 75% of employment, but their contribution to GDP is relatively low. “These characteristics reflect the structural limitations of an economy composed mostly of small-scale productive units, with low capacity for accumulation, productivity, and technological incorporation,” points out PRODesarrollo.
Furthermore, estimates from international organizations indicate that the number of informal productive units far exceeds that of formal ones. “The result is an economy with a high capacity for absorbing employment, but limited capacity for generating value,” the study summarizes.
The improvement in income for the poorest sectors, driven by social programs and public transfers, has contributed to the reduction of monetary poverty, but PRODesarrollo warns that this “does not necessarily imply a transformation of the structural conditions for generating income for a better quality of life.”
Another warning sign is consumption sustained by credit. The pace of growth in consumer credit and card usage suggests that part of the observed well-being is based on indebtedness, not exclusively on permanent income.
The organization questions whether informality is not just the problem, but also the way the economic system adapts to its own limitations. “In a productive structure characterized by low productivity, high fragmentation, and limited capacity to generate value, informality appears not only as an anomaly, but also as an adjustment mechanism,” it concludes.
As long as these structural conditions persist, the improvement in poverty indicators will coexist with an economic base that remains vulnerable, warns PRODesarrollo.