Paraguay Economic Forecast

Paraguay Economic Outlook

January 18, 2022

The economy continued to grow in Q3, albeit at a slower pace of 3.8% year-on-year, following the prior quarter’s 13.9% expansion. The slowdown was due to a moderation of domestic demand, with private, public and capital spending all growing at softer paces. Still, a tighter labor market and stronger household credit growth likely helped to sustain consumption, despite mounting price pressures in the period. Meanwhile, the external sector weighed on overall growth. Moving to Q4, the recovery will have likely slowed further, as activity grew at the softest pace in eight months in October. More positively, household credit growth picked up to a five-month high in the same month, likely supporting spending. In early January, authorities announced debt refinancing credit lines and tax cuts for agriculture and livestock producers until the end of September, to help them cope with a severe drought.

Paraguay Economic Growth

Economic growth is seen slowing this year, following 2021’s projected strong bounce-back. The moderation will be partly due to a statistical effect, as robust private and government spending will sustain activity. That said, fairly high public debt levels and extreme weather events such as severe droughts are key downside risks to the outlook. FocusEconomics panelists foresee the economy expanding 3.5% in 2022, which is down 0.1 percentage points from last month’s estimate, and 3.9% in 2023.

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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