Paraguay Economic Forecast

Paraguay Economic Outlook

May 14, 2019

The economy seemed to lose further momentum in the first quarter, in line with the trend seen during the second half of last year. In February, economic activity contracted for the third consecutive month and at the sharpest pace in over six years, in large part due to a severe drought which affected soy production. This in turn hit the external sector hard as merchandise exports fell in the first quarter, chiefly due to lower shipments of soy products. Furthermore, imports plunged in the same period, which hint at waning domestic demand. Meanwhile, at the conclusion of its Article IV visit to the country in late-April, the IMF commended authorities’ prudent economic and fiscal management. The Fund also encouraged reform of the pension system, raising tax revenues and reprioritizing spending towards investment in infrastructure and human capital.

Paraguay Economic Growth

Despite its likely weak showing at the start of the year, the economy should maintain a robust pace of expansion for the year overall on the back of strong consumer spending and solid investment activity. Weaker-than-projected growth in Argentina or Brazil, lower commodity prices and adverse weather conditions are the main downside risks to the outlook. Met the why particular panelists expect growth of 3.7% in 2019, which is down 0.2 percentage points from last month’s estimate, and 3.7% again in 2020.

Paraguay Economy Data

20132014201520162017
Population (million)6.66.76.86.97.0
GDP per capita (USD)4,4224,6364,0343,9924,233
GDP (USD bn)29.030.927.327.429.4
Economic Growth (GDP, annual variation in %)14.04.73.04.04.3
Domestic Demand (annual variation in %)7.45.32.6-  -  
Consumption (annual variation in %)4.53.81.90.9-  
Investment (annual variation in %)11.98.82.07.911.5
Industrial Production (annual variation in %)-  -  -  -  -  
Unemployment Rate7.96.55.57.4-  
Fiscal Balance (% of GDP)-1.7-1.1-1.7-1.5-1.5
Public Debt (% of GDP)14.417.620.022.824.1
Money (annual variation in %)17.57.85.88.116.4
Inflation Rate (CPI, annual variation in %, eop)3.84.23.13.94.5
Inflation Rate (CPI, annual variation in %)2.75.03.14.13.6
Inflation (PPI, annual variation in %)2.90.15.04.2-  
Benchmark Interest Rate (%)11.488.969.638.577.81
Exchange Rate (vs USD)4,5984,6365,7825,8485,588
Exchange Rate (vs USD, aop)4,3154,4655,2115,6835,632
Current Account (% of GDP)2.1-0.2-1.11.5-1.3
Current Account Balance (USD bn)0.6-0.1-0.30.4-0.4
Trade Balance (USD billion)1.71.00.61.40.6
Exports (USD billion)13.613.111.911.212.1
Imports (USD billion)11.912.111.39.811.5
Exports (annual variation in %)16.7-3.7-16.62.18.3
Imports (annual variation in %)7.81.1-14.6-5.117.7
International Reserves (USD)5.96.96.27.16.7
External Debt (% of GDP)54.253.459.259.6-  

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Paraguay Facts

ValueChangeDate
Exchange Rate6,3480.18 %May 13

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