Construction was one of the fastest growing areas in the economy in the late 1970s and early 1980s because of hydroelectric dams, other infrastructure projects, and brisk growth in residential housing in Asunción. Many of the raw materials used in the construction industry, such as lime, sand, kaolin, gypsum, wood, and stones, were found and mined locally. Construction grew at a pace of over 30 percent per year from 1977 to 1980, but in the 1980s it fluctuated dramatically with changes in hydroelectric activity and general economic growth. Construction amounted to 5.9 percent of GDP in 1986.

One of the country's largest investments in construction and in industry in general involved the expansion and modernization of cement facilities. After years of undercapacity in cement production and an outdated wet-cement process, the government spent nearly US$200 million to expand the country's largest cement plant at Vallemí. Financed through a consortium of French banks, the National Cement Industry (Industria Nacional de Cemento--INC) was completed in 1986. Because this completion date followed the pouring of cement at Itaipú, however, virtually all cement for that project came from Brazil. Moreover, located 546 kilometers west of Asunción, INC was far removed from most industrial activity, particularly hydroelectric construction. As a result, in the late 1980s the plant operated at only 45 percent of capacity, and the plant's capital and operating costs formed a major part of the nation's debt burden in the 1980s. Increasing the plant's utilization by exporting to regional markets frequently was discussed but in the late 1980s remained an unlikely prospect. The financial burden of INC became a political issue as the country's debt burden mounted throughout the decade.

The metal industry was the other major industry serving construction activity. Although Paraguay possessed no commercially exploitable metallic minerals, it had three steel plants. The largest plant, Paraguayan Steel (Aceros Paraguayos--Acepar), was completely government owned. Fueled by large charcoal furnaces and fed with Brazilian iron ore, Acepar was capable of producing 150,000 tons of steel annually, or about five times the country's average demand in the 1980s. Acepar began operation in late 1986, having missed both the Itaipú construction boom and the opportunity to contract for Yacyretá. Acepar's 1987 output was under 50,000 tons and was not expected to increase substantially in the future. Acepar could not cover its own operating costs, and even with government subsidies its steel was five times as costly as steel from other producers. In addition to Acepar, Paraguay had a plant with a capacity of a 50,000 tons per year that produced competitively priced steel bars and other metal products a marginal plant with only a 6,000-ton annual production capacity was also in operation.

Beyond steel production, the metal subsector comprised more than 1,000 small smiths and metal workshops. Paraguayan companies produced a wide assortment of consumer goods such as simple agricultural tools, general hardware items, and m226 metal furniture. The subsector also contained several large metallurgical companies. For the first time in the 1980s, local metallurgical companies produced water tanks, fuel tanks, and grain silos. Paraguay also maintained two respected shipyards.

Data as of December 1988