Vast potential in the Paraguayan market

According to data from the Vietnam Customs Department, bilateral trade between Vietnam and Paraguay rose from USD 73.81 million in 2021 to USD 211.02 million in 2025, reflecting a substantial expansion in trade relations over the 2021 - 2025 period.

In 2025, total bilateral trade reached USD 211.02 million, down 9.5% compared with 2024. However, the decline was mainly attributable to a decrease in Vietnam’s imports from Paraguay. Meanwhile, Vietnam’s exports continued to post robust growth, reaching USD 131.55 million, up 13.9% year-on-year.

Vietnam’s export structure continued to capitalize on its competitive strengths, with industrial products maintaining their position as the main export category to Paraguay. Exports of electrical machinery, electronic equipment and components totaled USD 15.88 million in 2025, accounting for 4.34% of Paraguay’s total imports in this product category.

Footwear remained a standout performer, with exports reaching USD 26.24 million and capturing as much as 18.9% of Paraguay’s import market. This product group has demonstrated strong competitiveness thanks to its consistent quality, diverse designs and competitive pricing. In addition, machinery and mechanical equipment, textiles and garments, rubber and plastic products, as well as optical instruments, continue to offer considerable room for market expansion.

According to the Vietnam Trade Office in Argentina, which is also responsible for Uruguay and Paraguay, Paraguay is among the fastest-growing and most stable economies in South America, maintaining annual GDP growth of approximately 3.5% to 4%. Inflation has remained below the central bank’s target of 4%, while the Guaraní has been relatively stable compared with many other regional currencies.

With its manufacturing sector still underdeveloped, Paraguay imports more than 80% of its demand for machinery, equipment, industrial goods and consumer products. The country’s annual import value ranged from USD 17.2 billion to USD 19.1 billion during the 2024 - 2025 period.

The Trade Office noted that Vietnamese exports currently account for only around 1.06% to 1.17% of Paraguay’s total imports, indicating substantial room for further market penetration. Beyond traditional export products, a number of emerging product categories also show strong growth potential, including smart home appliances, construction materials, electric motorcycles, automobile tires, ceramic tiles, construction glass and energy-efficient equipment.

Significant opportunities ahead

Favorable market trends and policy prospects are among Paraguay’s key advantages. The country is entering a period of accelerated infrastructure investment, urban development and housing construction, driving strong demand for steel, construction materials, electrical equipment and machinery. At the same time, high internet and smartphone penetration in major cities such as Asunción and Ciudad del Este is stimulating demand for consumer electronics, smart home appliances and technology products.

Paraguay’s abundant hydropower resources and its ongoing efforts to promote green transportation also present promising opportunities for Vietnamese manufacturers of electric motorcycles and energy-efficient technologies.

From a policy perspective, the greatest opportunity lies in the on-going negotiations for a Preferential Trade Agreement between Vietnam and Mercosur. Once the agreement is concluded, the bloc’s common external tariffs, currently ranging from 10% to 35%, are expected to be gradually reduced, significantly enhancing the competitiveness of Vietnamese exports. More importantly, Paraguay could serve as a strategic springboard for Vietnamese goods to expand their presence across the entire Mercosur market rather than solely supplying Paraguay’s domestic market.

Despite these opportunities, exports to Paraguay continue to face several challenges. The most significant obstacle remains the long geographical distance, which keeps logistics and ocean freight costs relatively high. International developments, particularly tensions in the Middle East, continue to place upward pressure on transportation costs and delivery times.

In addition, Paraguay is a highly price-sensitive market. The absence of a trade agreement between Vietnam and Mercosur means that many Vietnamese products remain subject to relatively high import tariffs, reducing their price competitiveness against goods from other exporting countries.

From the business perspective, the lack of bonded warehouses, limited local distribution networks and insufficient Spanish-language capabilities also constrain Vietnamese companies’ ability to effectively engage with local customers and business partners.

According to the Trade Office, Vietnam’s export outlook to Paraguay is expected to unfold in two phases. The first phase, spanning 2026 - 2028, is projected to be a recovery period following the launch of PTA negotiations, with annual export growth estimated at around 5% to 7%, depending largely on developments in global logistics and the geopolitical landscape.

The second phase, from 2028 to 2030, is expected to begin once the agreement enters into force. During this period, Vietnam’s exports are projected to accelerate significantly, expanding by approximately 15% to 20% annually, driven by tariff preferences and deeper access to the broader Mercosur market.

The Trade Office recommends continuing efforts to advance PTA negotiations, improve payment cooperation mechanisms, and strengthen collaboration on quarantine procedures and technical standards. At the same time, Vietnamese businesses are encouraged to invest proactively in logistics infrastructure, increase their presence at major trade fairs in Paraguay, develop Spanish-language branding and promotional content, and forge complementary commercial partnerships with local enterprises.

These measures will provide an important foundation for Vietnamese products to expand their market share in Paraguay while gradually strengthening their presence across the South American market.