​In Latin America, sustainability is often associated with institutional campaigns or external regulations. However, the principles of the circular economy represent a real strategic opportunity for companies seeking to adapt, differentiate themselves, and strengthen their resilience in the face of new challenges.

This approach moves away from the traditional “take, make, dispose” model, aiming instead for a system where resources remain in use for as long as possible. It involves redesigning processes, reusing materials, and discovering new value streams from what was previously considered waste.

In Paraguay, where many small and medium-sized enterprises face structural limitations, applying these principles can translate into concrete advantages:

• Lower operational costs.
• New revenue streams from waste or by-products.
• Greater competitiveness with customers and international actors who value sustainability.

Real-world examples: When circularity cuts costs and generates revenue

These benefits are not hypothetical. There are already real cases, both regionally and locally, that show how this model delivers tangible results.

In Chile, the company Algramo managed to reduce the price of daily consumer products by up to 30% through the use of smart refillable containers. Over 200,000 plastic containers have been avoided, and the model has led to new partnerships with major brands like Unilever.¹

Another outstanding initiative is EcoCarga, which has eliminated more than 100 tons of plastic through cleaning product refill stations. The system not only saves consumers money, but also improves margins for distributors.²

In Paraguay, TyD Recycling turns end-of-life tires into steel, mulch, and rubber. This avoids landfilling or burning waste while providing direct employment to 22 people and opportunities for over 350 local recyclers and suppliers.³

A compelling agro-industrial innovation comes from Maigotex, which has started producing plant-based leather from mango waste. What was once discarded is now a cost-free raw material with high added value.⁴

Several of these projects have received funding from the Circular Opportunities program, driven by the European Union, Koga, and GIZ, offering up to €30,000 per initiative.⁵

Globally, it is estimated that an industrial transition to circular models could unlock up to $4.5 trillion in economic value by 2030.⁶

Circular economy is not just an environmental trend; it is a concrete business strategy. Companies that embrace these principles will not only be better positioned to meet future market demands, but will also discover smarter, more efficient, and responsible ways to grow.

Mario Contreras
Club Networking
Strategic analysis and sustainable business development

Sources

1. Algramo – Circular impact case studies
2. EcoCarga – Plastic-free refill systems
3. Circular Opportunities Program – GIZ Paraguay (2023)
4. Maigotex – Circular economy in action
5. Circular Opportunities – EU + Koga + GIZ
6. Ellen MacArthur Foundation (2015): Growth Within: A Circular Economy Vision for a Competitive Europe​

As a Chilean who lived several years in Sweden and currently resides in Paraguay, I’ve had the unique opportunity to closely observe three very different economic realities.
First, Chile — my home country — with a mature and structured economy.
Then, Sweden — highly developed, with a strong social model and long-term policies.
​And now, Paraguay — a country growing with dynamism and stability, but from a completely different base.
​
This article is not about comparing to compete, but rather to understand. I’m interested in analyzing why Paraguay is growing at a faster pace than Chile, what factors explain this phenomenon, and what we can expect in the coming years. I share this perspective based on lived experience, technical analysis, and a deep connection to both countries.

Current macroeconomic outlook
Paraguay closed 2024 with estimated GDP growth between 3.8% and 4.0%, even surpassing official forecasts. The growth was driven mainly by agro-exports and the energy sector. It was the fastest-growing economy in South America that year.
Chile, in contrast, recorded a 2.6% growth rate in 2024 — also above projections — due to improved exports and a moderate recovery in domestic consumption.
This represents a growth gap of approximately 1.5 percentage points in favor of Paraguay.

Factors Driving Paraguay’s Growth

• Favorable Business Climate:
  Paraguay leads Latin America’s Economic Climate Index (ICE) with a score of 153.9, thanks to its macroeconomic stability, tax incentives, and low operational costs.
• Agro-industrial and Energy Power:
  Paraguay is a major exporter of clean energy (Itaipú and Yacyretá dams), along with key agricultural products like soy, corn, and beef.
• Infrastructure Investment:
  Public investment in logistics and export corridors is generating a multiplier effect on the economy.
• Tax Advantage:
  Paraguay enjoys a significantly lower corporate tax burden:
  • A flat corporate income tax rate of 10%,
  • Plus an 8% dividend tax for residents.
    In contrast, Chile applies a general 27% rate (or 25% for SMEs under Article 14 D of the Income Law), and a personal dividend tax that brings the total effective tax burden close to 35%.
• Young Demographics:
  Paraguay has a median age of 29, with a large percentage of the population under 35 — fueling both labor supply and future consumption.

Chile: Moderate Growth with Structural Challenges.
Chile remains a mature economy with institutional and financial stability. However, its structural growth capacity is limited. The Central Bank projects GDP growth between 2.0% and 2.5% in 2025.
Despite being one of the most developed economies in Latin America in terms of per capita income, Chile faces several internal challenges:

• Low productivity in key sectors
• Persistent inequality
• Weak public and private investment
• High dependence on copper exports and global demand

Economic Outlook for 2025

• Paraguay: The Central Bank and international institutions forecast growth between 3.8% and 4.2%, with a focus on attracting more FDI and diversifying exports.
• Chile: Projections by the IMF, OECD, and Central Bank agree on a range of 2.0% to 2.5%, dependent on international markets, mining investment, and internal structural reforms.
  ​
  

Paraguay has consolidated an agile growth model, built on its natural advantages, openness to trade, and fiscal efficiency — allowing it to surpass Chile in annual growth.
Chile, while still a solid and respected regional benchmark, is showing signs of structural deceleration. To return to a path of sustained growth, it must promote investment, diversify its productive matrix, and accelerate productivity-focused reforms.
Both countries have strengths.
Paraguay stands out as a clear opportunity for those seeking to enter a dynamic emerging market.
Chile, on the other hand, offers a more predictable environment, albeit with lower short-term growth expectations.
This analysis is not intended to make judgments or spark competitive comparisons.
Rather, it stems from a personal and technical perspective shaped by having lived in very different contexts — Chile, Sweden, and now Paraguay.
I share these observations to contribute to the economic conversation with a hybrid outlook: one that blends lived experience, professional interest, and a genuine desire to better understand the dynamics transforming the region.

Mario Contreras
Club Networking