Paraguay Economic Forecast

Paraguay Economic Outlook

November 10, 2020

The economic situation likely improved in Q3 yet remained challenging, after GDP contracted in Q2 due to a significant decline in domestic demand. Activity shrank in August after having expanded in July, mainly dragged down by a deterioration in the services sector. Moreover, although consumer sentiment recovered somewhat in Q3, it remained downbeat overall. However, public investment soared in the January-September period, providing some relief to the economy. Meanwhile, the difficult economic situation was reflected in a considerable drop in tax revenue in the first 10 months of the year, although October saw only a slight reduction compared to last year, hinting at firming activity in Q4. In politics, Benigno López recently stepped down as finance minister and was replaced by Óscar Llamosas, who is advocating for streamlining public spending in fiscal reforms to come.

Paraguay Economic Growth

The economy is set to rebound in 2021 from its coronavirus-induced contraction this year. Recovering capital and household spending, coupled with the reopening of the global economy, should support growth, which will also benefit from an expansionary fiscal stance. That said, the unpredictable course of the pandemic clouds the outlook. FocusEconomics panelists foresee the economy expanding 3.9% in 2021, which is up 0.2 percentage points from last month’s estimate, and 4.2% 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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