Paraguay Economic Forecast

Paraguay Economic Outlook

September 14, 2021

Conditions continued to improve in Q2 but likely remained challenging, following a milder expansion in GDP in Q1. Activity grew strongly in April–June, but the pace eased at the end of the quarter as the base effect faded. Household credit growth remained solid, but sequentially moderated throughout Q2 and the unemployment rate continued to tick up in the quarter. This, coupled with higher inflation, likely dented household spending somewhat. That said, goods imports and exports grew markedly in Q2—albeit supported by a base effect—signaling healthier demand dynamics. Turning to Q3, credit expanded at a softer pace in July and merchandise exports and imports growth eased in July–August. More positively, infection rates have plunged and the vaccination drive has picked up recently, allowing authorities to loosen some restrictions in August.

Paraguay Economic Growth

GDP should return to growth this year as the vaccination campaign progresses and restrictions are lifted, bolstering domestic demand. Moreover, exports will benefit from the recovery in key trading partners. However, ongoing uncertainty over the evolution of the pandemic and new strains of the virus pose downside risks. FocusEconomics panelists foresee the economy expanding 4.2% in 2021, which is up 0.3 percentage points from last month’s estimate, and 3.9% in 2022.

Paraguay Economy Data

2015 2016 2017 2018 2019
Population (million)6.86.97.07.17.2
GDP per capita (USD)5,3485,2485,5965,7275,335
GDP (USD bn)36.136.038.940.438.2
Economic Growth (GDP, annual variation in %)3.14.35.03.40.0
Domestic Demand (annual variation in %)2.31.55.95.80.7
Consumption (annual variation in %)3.83.24.24.11.9
Investment (annual variation in %)-2.12.05.96.9-6.6
Industrial Production (annual variation in %)-  -  -  -  -  
Unemployment Rate5.46.05.25.65.7
Fiscal Balance (% of GDP)-1.3-1.1-1.1-1.3-2.8
Public Debt (% of GDP)15.117.318.219.421.3
Money (annual variation in %)5.88.116.46.16.3
Inflation Rate (CPI, annual variation in %, eop)3.13.94.53.22.8
Inflation Rate (CPI, annual variation in %)3.14.13.64.02.8
Inflation (PPI, annual variation in %)5.04.22.02.31.1
Benchmark Interest Rate (%)9.638.577.818.58-  
Exchange Rate (vs USD)5,7825,8485,5885,9616,453
Exchange Rate (vs USD, aop)5,2105,6835,6325,7316,238
Current Account (% of GDP)-0.43.63.1-0.2-1.2
Current Account Balance (USD bn)-0.11.31.2-0.1-0.4
Trade Balance (USD billion)0.82.21.90.80.5
Exports (USD billion)11.112.013.413.712.7
Imports (USD billion)10.39.811.512.912.2
Exports (annual variation in %)-15.37.911.92.5-7.6
Imports (annual variation in %)-14.7-5.117.912.0-5.2
International Reserves (USD)6.27.18.18.08.0
External Debt (% of GDP)44.645.140.939.1-  

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Paraguay Facts

Value Change Date
Exchange Rate6,4530.18 %Jan 01

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