Paraguay Economic Outlook
June 14, 2022The economy has had a poor start to the year. Following tepid growth in January, activity contracted over 5% year on year in February–April, amid lower soybean production as a result of drought. Moreover, a much higher unemployment rate in Q1, double-digit inflation and tepid consumer sentiment have likely weighed on household spending. These factors more than offset the boost from the removal of virtually all remaining Covid-19 restrictions in February, and strong credit growth through April. In mid-May, S&P Global Ratings confirmed its ‘BB’ rating despite the adverse economic impact of the drought, citing fiscal prudence and robust medium-term growth prospects. In other news, the government recently announced a minimum wage increase of 11.4%. While this should provide support to spending in the near term, the move could also be inflationary.
Paraguay Economic GrowthEconomic growth is set to slow dramatically this year; the severe drought the country is experiencing has led to a sharp downgrade of growth prospects. High inflation and tighter monetary conditions will further weigh on momentum. Extreme weather events, an intensification of the war in Ukraine, and instability in Argentina and Brazil are key risks. FocusEconomics panelists foresee the economy expanding 0.9% in 2022, which is unchanged from last month’s estimate, and 4.2% in 2023.
Paraguay Economy Data
5 years of Paraguay economic forecasts for more than 30 economic indicators.
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|Exchange Rate||6,453||0.18 %||Jan 01|
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