Relations between Germany and Paraguay are friendly and the people of Paraguay have a very positive image of Germany. Many Paraguayans are aware of their German roots. Immigration continues in the present day, and an estimated 26,000 Germans currently live in Paraguay. Germany is also seen as a valued partner due to its development work and the cultural role it plays in the country. When the Stroessner dictatorship (1954‑89) ended, Germany stood by the country on its road to democracy. This involved investigations into the crimes committed during the dictatorship, as well as the implementation of judicial reforms partly based on the German model.

Paraguay belongs to the MERCOSUR free trade area. As a result, Paraguay’s relations with the European Union have intensified in recent years. Among the EU member states, Spain and Germany are particularly important partners. Bilateral trade with Germany totalled 145.9 million euro in 2023, with a German trade surplus. Paraguay’s main imports from Germany are chemical products, cars, car parts, machinery and electrical goods; it primarily exports food and raw materials. The deliveries from branches of German businesses in Brazil are also significant.

From 2003, Paraguay experienced an economic upturn and managed to almost halve poverty in this period. Nevertheless, it remains one of the poorest countries in South America and has marked socio-economic inequalities. The COVID‑19 pandemic interrupted the country’s positive economic development.

German bilateral development cooperation with Paraguay has ended. This means more importance attaches to engagement in EU development cooperation, as well as in triangular cooperation, regional projects and the secondment of integrated experts.

In Asunción, there is a German-Paraguayan cultural institute (Instituto Cultural Paraguayo-Alemán (Goethe-Zentrum) that makes a major contribution to the capital’s cultural scene, offering language courses and a wide range of cultural events. Cultural preservation projects supported by Federal Government funding likewise play an important role.