Paraguay, inland republic in South America, bounded on the northwest and north by Bolivia, on the east by Brazil, and on the south and southwest by Argentina. The total area of Paraguay is 406,752 sq km (157,048 sq mi). Asunción is the country's capital and largest city.

The climate of Paraguay is subtropical. At Asunción average temperatures range from about 17°C (about 63°F) in July to about 27°C (about 80°F) in January. In the Chaco and other points to the north temperatures often reach 38°C (100°F). Annual rainfall averages some 1,120 mm (44 in) in the Asunción area, some 815 mm (32 in) in the Gran Chaco, and some 1,525 mm (60 in) in the eastern forest regions. The Chaco has heavy rainfall in the summer and almost no rain in the winter.

Paraguay's population is distributed unevenly throughout the country. The vast majority of the people live in the eastern region, most within 160 kilometers (100 mi.) of Asuncion, the capital and largest city. The Chaco, which accounts for about 60% of the territory, is home to less than 2% of the population. Ethnically, culturally, and socially, Paraguay has one of the most homogeneous populations in South America. About 95% of the people are of mixed Spanish and Guarani Indian descent. Little trace is left of the original Guarani culture except the language, which is understood by 90% of the population. About 75% of all Paraguayans speak Spanish. Guarani and Spanish are official languages. Germans, Japanese, Koreans, ethnic Chinese, Arabs, Brazilians, and Argentines are among those who have settled in Paraguay.

Paraguay has a predominantly agricultural economy, with an important commercial sector. There is a large subsistence sector, including sizable urban underemployment, and a large underground re-export sector. The country has vast hydroelectric resources, including the world's largest hydroelectric generation facility built and operated jointly with Brazil (Itaipú Dam), but it lacks significant mineral or petroleum resources. The government welcomes foreign investment and provides national treatment to foreign investors. The economy is dependent on exports of soybeans, cotton, grains, cattle, timber, and sugar; electricity generation, and to a decreasing degree on re-exporting to Brazil and Argentina products made elsewhere. It is, therefore, vulnerable to the vagaries of weather and to the fortunes of the Argentine and Brazilian economies.

Most urban streets consist of cobblestones over dirt. Some roads in Asuncion and other large cities are paved. However, these roads frequently develop potholes that often remain without repair for several months. Nearly all rural roads are unpaved, and during rainy periods they may be impassable. Road signs indicating hazards, such as sharp curves or major intersections, are lacking in many areas. Driving or traveling at night is not advisable outside Asuncion, as animals or vehicles without proper lights are often on the roads.

Only minimal standards must be met to obtain a Paraguayan driver's license, and driver education prior to licensing is not common. Drivers throughout Paraguay routinely ignore traffic regulations. Persons who drive in Paraguay should be prepared to drive defensively in both urban and rural areas.