Monetary poverty in Paraguay fell from 46% in 2002 to around 16% in 2025, according to the National Institute of Statistics (INE). The improvement is real and consistent with rising labor income and social transfers. However, this figure does not tell the whole story.
An analysis by the organization Pro Desarrollo points out that the reduction in poverty coexists with persistent economic vulnerability. “Poverty can be reduced in the indicator, although vulnerability remains,” the study highlights. The central question, according to the text, shifts from “how many are poor?” to “how stable is the economic life of those who manage to escape this condition?”.
In 2025, the extreme poverty line was set at 933,108 guaranis per capita per month in urban areas and 681,839 guaranis in rural areas. The problem is not the threshold itself, but what happens around it. A significant portion of the population is concentrated at income levels just above this threshold. This means that small shocks — such as illness, job loss, debt, or a rise in the cost of living — can push many households back into deprivation.
The labor market reinforces this fragility. About six out of ten employed people in Paraguay work in the informal sector, according to the INE. A relevant proportion of informal wage earners earn below the minimum wage. These workers generate enough income to surpass the poverty line, but without stability or protection.
The productive structure deepens the pattern. According to the Ministry of Industry and Commerce (MIC), micro, small, and medium-sized enterprises (MSMEs) account for approximately 98% of the country's economic units and concentrate between 70% and 75% of employment. However, their contribution to the Gross Domestic Product (GDP) remains relatively low. The economy has a high capacity to absorb labor, but a limited capacity to generate value.
Estimates from the UNDP indicate that the number of informal productive units far exceeds formal ones. Informality, according to the analysis, is not just a problem but also an adjustment mechanism: it allows the absorption of workers and the generation of minimum income where the formal sector cannot expand.
Consumption, in turn, shows signs of expansion supported by credit. The growth in consumer credit and credit card use suggests that part of the observed well-being is sustained by debt, not just permanent income. Added to this is a macroeconomic environment of heterogeneous growth, pressures on the formal sector, and risks of external and fiscal volatility.
“It is not that the data are wrong. It is that they are incomplete,” the study concludes. Poverty measured by income insufficiency has decreased, but vulnerability — the inability to sustain that income over time and to absorb shocks — remains and, in some cases, expands in new, less visible forms.