Paraguay Economic Forecast

Paraguay Economic Outlook

July 14, 2020

The economy was remarkably resilient in the first quarter, underpinned by robust domestic demand, although available indicators show it took a notable hit in the second quarter. GDP expanded 3.5% in annual terms in Q1, matching the fourth quarter’s outturn, sustained by a jump in fixed investment fueled by soaring construction activity, resilient consumer spending and upbeat government consumption. Turning to Q2, however, economic activity tumbled in April, dragged on by a sour showing of the services and manufacturing sectors. Revealing the magnitude of the hit in Q2, merchandise exports plunged throughout the quarter. In response, the government has boosted public infrastructure spending, which should cushion the blow. That said, higher outlays and lower revenues are translating into a sizable widening of the fiscal deficit.

Paraguay Economic Growth

The health crisis will cause GDP to contract this year, although the country will cope with the crisis better than its regional peers. The external channel is set to be severely affected, which, coupled with elevated uncertainty, will weigh on spending decisions domestically. Downside risks stem from poor management of the health crisis in the region and possible outbreaks. FocusEconomics panelists estimate the economy to contract 2.0% in 2020, which is unchanged from last month’s estimate, before expanding 4.7% in 2021.

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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