Paraguay Economic Outlook

September 10, 2019

The economy seems to have contracted more rapidly in the second quarter after shrinking for the first time in over six years in the first quarter. The economic activity indicator fell at a sharper pace, on average, in Q2. This was largely due to falling soybean production amid adverse weather conditions. Consequently, merchandise exports contracted more markedly in the quarter against a challenging trade backdrop. That said, the rate of decline in overall activity eased throughout Q2, thanks to a buoyant services sector and reduced drag by the manufacturing sector. Moreover, a notably softer drop in average remittances and strong credit growth in the quarter hint at a rebound in household consumption. Turning to the third quarter, exports fell less sharply in July, while credit availability remained robust in the month despite moderating somewhat.

Paraguay Economic Growth

The economy is seen losing further traction this year amid downbeat external conditions. Argentina’s economic crisis and Brazil’s lackluster outturn—both key trading partners of Paraguay—are expected to weigh on exports. A notable weakening in domestic demand is also set to restrain the expansion. FocusEconomics panelists expect growth of 2.3% in 2019, which is down 0.2 percentage points from last month’s estimate, and 3.6% in 2020.

Paraguay Economy Data

	2013	2014	2015	2016	2017
Population (million)	6.6	6.7	6.8	6.9	7.0
GDP per capita (USD)	5,891	6,047	5,348	5,248	5,596
GDP (USD bn)	38.6	40.3	36.1	36.0	38.9
Economic Growth (GDP, annual variation in %)	8.4	4.9	3.1	4.3	5.0
Domestic Demand (annual variation in %)	5.3	7.0	2.3	1.5	5.9
Consumption (annual variation in %)	4.0	6.2	3.8	3.2	4.2
Investment (annual variation in %)	7.9	7.1	-2.1	2.0	5.9
Industrial Production (annual variation in %)	-	-	-	-	-
Unemployment Rate	5.0	6.0	5.4	6.0	5.2
Fiscal Balance (% of GDP)	-1.3	-0.9	-1.3	-1.1	-1.1
Public Debt (% of GDP)	10.8	13.5	15.1	17.3	18.2
Money (annual variation in %)	17.5	7.8	5.8	8.1	16.4
Inflation Rate (CPI, annual variation in %, eop)	3.8	4.2	3.1	3.9	4.5
Inflation Rate (CPI, annual variation in %)	2.7	5.0	3.1	4.1	3.6
Inflation (PPI, annual variation in %)	2.9	0.1	5.0	4.2	2.0
Benchmark Interest Rate (%)	11.48	8.96	9.63	8.57	7.81
Exchange Rate (vs USD)	4,598	4,636	5,782	5,848	5,588
Exchange Rate (vs USD, aop)	4,315	4,465	5,210	5,683	5,632
Current Account (% of GDP)	1.6	-0.1	-0.4	3.6	3.1
Current Account Balance (USD bn)	0.6	-0.1	-0.1	1.3	1.2
Trade Balance (USD billion)	1.7	1.0	0.8	2.2	1.9
Exports (USD billion)	13.6	13.1	11.1	12.0	13.4
Imports (USD billion)	11.9	12.1	10.3	9.8	11.5
Exports (annual variation in %)	16.8	-3.7	-15.3	7.9	11.9
Imports (annual variation in %)	7.7	1.2	-14.7	-5.1	17.9
International Reserves (USD)	5.9	6.9	6.2	7.1	8.1
External Debt (% of GDP)	40.7	41.0	44.6	45.1	41.3

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Paraguay Facts

	Value	Change	Date
Exchange Rate	6,248	0.18 %	Sep 04

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