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Paraguay Economic Forecast

Paraguay Economic Outlook

Last year, GDP stagnated, making the country Latin America’s worst-performing economy. In Q1 of this year, year-on-year GDP growth sped up sharply to 5.2% thanks to stronger exports plus private and government spending and a softer decline in fixed investment. In Q2, GDP growth likely remained robust, with economic activity expanding at a faster year-on-year pace than in the prior quarter. Output in agriculture, electricity, manufacturing and services supported activity in the quarter, according to the statistics office. In other news, Santiago Peña took office as prime minister on 15 August. He will face a host of challenges ahead: Rising crime, juggling ties with both China and Taiwan, a U.S. probe into his political mentor and the risk to agricultural output posed by the El Niño weather pattern.

Paraguay Inflation

Inflation slowed for the seventh consecutive month to 2.9% in August (July: 3.5%), below the Central Bank’s 4.0% target. Average inflation should remain roughly stable for the rest of the year before rising in 2024. Declining inflation led the Central Bank to cut its policy rate for the first time in more than three years on 23 August—by 25 basis points to 8.25%.

This chart displays Economic Growth (GDP, annual variation in %) for Paraguay from 2013 to 2022.

Paraguay Economic Data

2018 2019 2020 2021 2022
Population (million) 7.1 7.2 7.3 7.4 7.5
GDP (USD bn) 40.1 37.9 35.3 39.8 41.6
GDP per capita (USD) 5,690 5,297 4,872 5,414 5,579
GDP (PYG bn) 230,576 236,681 239,915 270,634 291,336
Economic Growth (Nominal GDP, ann. var. %) 5.2 2.6 1.4 12.8 7.6
Economic Growth (GDP, ann. var. %) 3.2 -0.4 -0.8 4.0 0.1
Domestic Demand (ann. var. %) 6.4 0.2 -2.8 10.1 2.5
Private Consumption (ann. var. %) 4.3 1.8 -3.6 6.1 2.2
Government Consumption (ann. var. %) 3.0 4.7 5.1 2.6 -5.7
Fixed Investment (ann. var. %) 6.9 -6.1 5.3 18.2 -2.3
Exports (G&S, ann. var. %) -0.4 -3.4 -9.0 2.1 -1.6
Imports (G&S, ann. var. %) 8.2 -2.0 -15.2 21.8 5.6
Unemployment (% of active population, eop) 5.6 5.7 7.2 6.8 5.7
Fiscal Balance (% of GDP) -1.3 -2.8 -6.1 -3.6 -3.0
Public Debt (% of GDP) 22.3 25.8 36.9 37.5 40.9
Money (ann. var. of M2 %) 6.2 7.2 19.1 6.8 3.0
Inflation (CPI, ann. var. %, eop) 3.2 2.8 2.2 6.8 8.1
Inflation (CPI, ann. var. %, aop) 4.0 2.8 1.8 4.8 9.8
Policy Interest Rate (%, eop) 5.25 4.00 0.75 5.25 8.50
Exchange Rate (PYG per USD, eop) 5,960 6,464 6,897 6,906 7,366
Exchange Rate (PYG per USD, aop) 5,746 6,246 6,789 6,798 7,006
Current Account Balance (USD bn) -0.1 -0.2 0.7 -0.3 -2.8
Current Account Balance (% of GDP) -0.2 -0.6 2.0 -0.8 -6.7
Merchandise Trade Balance (USD bn) 0.6 0.2 1.2 0.6 -1.9
Merchandise Exports (USD bn) 13.2 12.1 11.0 13.2 12.8
Merchandise Imports (USD bn) 12.6 11.9 9.7 12.6 14.7
Merchandise Exports (ann. var. %) 1.5 -8.1 -9.6 20.7 -3.1
Merchandise Imports (ann. var. %) 11.6 -5.5 -18.3 29.4 17.1
Foreign Direct Investment (USD bn) 0.2 0.3 0.1 0.2 0.5
International Reserves (USD bn) 8.0 7.7 9.5 9.9 9.8
International Reserves (months of imports) 7.6 7.7 11.7 9.5 8.0
External Debt (USD bn) 15.8 16.4 19.8 21.4 -
External Debt (% of GDP) 39.4 43.2 55.9 53.6 -

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