Jesuit missions and settlements abounded and Paraguay painlessly asserted its independence from Spain in 1811.
Paraguay has been involved in two crippling wars. The War of the Triple Alliance (Argentina, Brazil and Uruguay) from 1865-1870 in which Paraguay lost two-thirds of all adult males, and the Chaco War of 1932-1935 which saw Bolivia invade Paraguay trying to access a port on the Paraguay river.
A 35-year military government by Alfredo Stroessner was overthrown in 1989 and free presidential elections have been held since, but its democratic system is often criticised for its widespread corruption.
Landlockeded between Argentina, Brazil and Bolivia, Paraguay's climate ranges from subtropical to temperate and it is a land of grassy plains, wooded hills and thorny scrub.
The dense thorn forest harbours some of Paraguay's most endangered wildlife but affords some protection for large cats such as jaguars, pumas and ocelots.
Waterways and rivers crisscross the country and the Paraguay river runs from the Argentinian border to the Brazilian border.
The name Paraguay is derived from the Guarani word "par" meaning river, and "guay", meaning "this side".
The expression in Guarani is thought to refer solely to the capital city of Asuncion but in Spanish it refers to the entire country.
Most of Paraguay's population is concentrated in the southern portion of the country and it is possibly the most homogeneous population in Latin America, 95% being Meztisos (mixed) of Spanish and Guarani Indian descent.
The Paraguay flag
Germans, Japanese, Koreans, Chinese, Arabs, Brazilians and Argentinians are among those who have also settled in Paraguay.
In the late 19th century a group of Australians settled in Paraguay as a part of a short-lived socialist experiment.
The Guarani language is understood by 90% of the population, but the culture barely exists anymore.
Paraguay is known to be the major producer and supplier of cannabis for Brazil, Argentina and Chile.
It is a transhipment point for cocaine headed out of South America, and the tri-border area - where Paraguay, Argentina and Brazil converge - is the focal point for money laundering, arms smuggling and drug trafficking.
Official name: Republic of Paraguay
Government type: Constitutional republic
Population: 6,347,884 (July 2005).
Languages: Spanish (official), Guarani (official).
Ethnic diversity: Mestizo (mixed Spanish and Amerindian) 95%, other 5%.
Religion: Roman Catholic 90%, Mennonite and other Protestant 10%.
The majority is Roman Catholic
Political parties and leaders: Asociacion Nacional Republicana - Colorado Party or ANR, Herminio Caceres, interim president; Movimiento Union Nacional de Ciudadanos Eticos or UNACE, Enrique Gonzalez Quintana, acting chairman; Patria Querida (Beloved Fatherland Party) or PQ, Pedro Nicolas Maraa Fadul Niella; Partido Encuentro Nacional or PEN, Luis Torales Kenney; Partido Liberal Radical Autentico or PLRA, Julio Cesar Franco; Partido Pais Solidario or PPS, Carlos Alberto Filizzola Pallares note: Nicanor Duarte Frutos on leave as party leader of the Colorado Party or ANR while serving as president of Paraguay; Lino Cesar Oviedo Silva, leader of UNACE, is currently serving a 10-year prison term.
Political pressure groups and leaders: Ahorristas Estafados or AE; Coordinating Table of National Campesino Organisations or MCNOC; National Federation of Campesinos or FNC; National Workers Central or CNT; Paraguayan Workers Confederation or CPT; Roman Catholic Church; Unitary Workers Central or CUT.
International organisation participation includes: FAO, G-77, IADB, IAEA, IFAD, IFC, IFRCS, ILO, IMF, IMO, Interpol, IOC, IOM, ISO (correspondent), ITU, LAES, LAIA, NAM (observer), OAS, ONUB, OPANAL, OPCW, PCA, RG, UN, UNCTAD, UNESCO, UNIDO, UNMEE, UNMIL, UNOCI, UPU, WCL, WCO, WHO, WIPO, WMO, WToO, WTO
Military branches: Army, Navy (includes Naval Aviation, River Defence Corps, Coast Guard), Air Force.
Paraguayan President Nicanor
Duarte Frutos (C)
Military manpower - Military age: 18 for compulsory and voluntary military service; conscript service obligation - one year for Army, two years for Navy (2004)
Military manpower: There are approximately 1,345,022 males aged between 18 and 49.
Location: Central South America, northeast of Argentina.
Area: Total: 406,750sq km; land: 397,300sq km; water: 9450sq km
Land boundaries: Total: 3920km; border countries: Argentina 1880km, Bolivia 750km, Brazil 1290km
Climate: Subtropical to temperate; substantial rainfall in the eastern portions, becoming semiarid in the far west.
Terrain: Grassy plains and wooded hills east of Rio Paraguay; Gran Chaco region west of Rio Paraguay mostly low, marshy plain near the river, and dry forest and thorny scrub elsewhere.
Natural hazards: Local flooding in southeast (early September to June); poorly drained plains may become boggy (early October to June)
Natural resources: Hydropower, timber, iron ore, manganese, limestone.
People carry contraband through
a border crossing
Land use: Arable land: 7.6%; permanent crops: 0.23%; other: 92.17% (2001)
Environment - current issues: Deforestation; water pollution; inadequate means for waste disposal pose health risks for many urban residents; loss of wetlands.
Environment - international agreements: Party to: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Ozone Layer Protection, Wetlands.
Economy: The economy has shown little evidence of major growth since the 80s and its poor performance is due to many factors. These include political uncertainty, large internal and external debts, corruption, inefficient infrastructure and the impact of an underground economy based on smuggling, money-laundering and drug-trafficking.
A large percentage of the population derives its living from agriculture at a subsistence level and accurate economic measures are difficult to obtain.
About 60% of Paraguay's gross domestic product comes from trade with Brazil and the devaluation of the Brazilian real in 1998 contributed significantly to the country's economic stagnation.
GDP: $4172.67 per person.
GDP - Real growth rate: 2.8% (2004)
Industries: Sugar, cement, textiles, beverages, wood products, steel, metallurgy, electric power.
Exports: Soya bean, feed, cotton, meat, edible oils, electricity, wood, leather.
Import: Road vehicles, consumer goods, tobacco, petroleum products, electrical machinery.
Labour force: 2.66 million (2004)
Unemployment rate: 15.1% (2004)
Sources: CIA World Fact Book, Infoplease.com, Nationmaster.com, Lonely Planet World Guide.