Asunción, Paraguay - Paraguay is actively pursuing stronger economic ties with the United Arab Emirates (UAE) as it grapples with a significant trade imbalance with China. Recent data from the Central Bank of Paraguay (BCP) reveals that in the first quarter of 2025, 37.6% of Paraguay's imports originated from China, while its exports to China accounted for a mere 0.3% of total exports. This disparity stems from Paraguay's diplomatic stance towards Taiwan, which restricts direct trade with mainland China.

Consequently, Paraguayan export companies are resorting to indirect routes through Uruguay or Argentina to ship goods to mainland China. The BCP has highlighted this substantial trade deficit with China as a serious concern for the Paraguayan economy, urging a thorough review of the situation.

In response to this trade imbalance and to diversify its economy, Paraguay is proactively strengthening its collaboration with the UAE. Paraguayan President Santiago Peña recently received an invitation from UAE President Sheikh Mohamed bin Zayed Al Nahyan to continue discussions on investment projects. These discussions encompass the expansion of the Silvio Pettirossi International Airport, infrastructure development, and agreements related to the carbon emissions trading market. Notably, Paraguay's exports to the UAE have seen a significant upswing recently, underscoring the potential of economic cooperation between the two nations.

During a meeting with UAE Ambassador Al-Saqer Wabran Hamad Mubarak Al-Ahbabi, President Peña reaffirmed the Memorandum of Understanding (MOU) signed in 2024 concerning the expansion of the Silvio Pettirossi International Airport and other development projects. He also expressed Paraguay's anticipation for the UAE's involvement in financing specific sections of the Bioceanic Road Corridor, which will traverse the South American continent, and in implementing the International Transferred Mitigation Outcomes (ITMOs) agreement within the carbon emissions market, as agreed upon at COP28.

The two leaders held their first bilateral meeting in October 2023 during the United Nations Climate Change Conference (COP28) in Dubai. President Peña also visited the UAE shortly before assuming office.

Since Paraguay established a commercial attaché office in the Middle East in February 2023, its exports to the UAE market have surged by an impressive 170%. Key export items include yerba mate, high-end clothing, palo santo wood, and cotton seeds. This growth indicates Paraguay's success in tapping into a new export market.

In parallel, Paraguay is also enhancing its international cooperation in the education sector. The Ministry of Education recently signed an MOU with Israel to promote collaboration in pedagogy, psychology, and educational technology. This agreement is expected to enable Paraguayan educational institutions to strengthen their education system through knowledge exchange and partnerships with Israeli experts.

Paraguayan Minister of Education Luis Fernando Ramírez expressed his gratitude to Israeli Ambassador Amit Mekel, stating, "We appreciate this understanding that opens the way for us to benefit from the learning, development, and achievements that Israel has made in the field of education."

Paraguay's multifaceted efforts in diplomatic and economic cooperation signal a strong determination to address the immediate challenge of its trade imbalance with China and secure new drivers for economic growth. The intensified collaboration with the promising UAE market is particularly anticipated to have a positive impact on the Paraguayan economy. The future strategies Paraguay will employ to reshape its trade structure and achieve sustainable economic growth remain a key point of interest.

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