Paraguay Economic Forecast

Paraguay Economic Outlook

October 11, 2021

Economic growth accelerated markedly in the second quarter, with GDP expanding 14.5% in annual terms (Q1: +0.5% yoy), although the reading was flattered by a low base effect. The improvement was largely due to a strong rebound in private and public spending, as well as exports. Moreover, fixed investment growth picked up notable pace. Turning to Q3, growth seemingly lost momentum as economic activity expanded at the softest rate in five months in annual terms in July. More positively, household credit growth remained robust in the first two months of the quarter, although quickly rising inflation in Q3 likely dented consumption. That said, fiscal revenues increased considerably in annual terms in the quarter, pointing to healthier dynamics. Meanwhile, the 2022 draft budget is moving along the legislative path: The plan aims to reduce the fiscal deficit to 3.0% of GDP from 6.0% this year.

Paraguay Economic Growth

The economy is set to expand solidly this year and next, supported by healthy growth in household spending, fixed investment and foreign demand amid the gradual removal of restrictions domestically and abroad. A relatively moderate public debt stock bodes well for financial stability. That said, pandemic-related uncertainty in the region poses a downside risk. FocusEconomics panelists foresee the economy expanding 4.4% in 2021 and 3.8% in 2022, which is down 0.1 percentage points from last month’s estimate.

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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