In the landscape of South American economies, Paraguay emerged as a regional leader in 2023, recording the highest economic growth among its neighbors. According to a recent report from Paraguay’s Central Bank (BCP), the nation’s economy expanded by an impressive 4.9% in the last quarter of 2023. This follows a growth of 3.7% in the previous quarter and marks a significant leap from the 1.8% growth witnessed in the final quarter of 2022.
Overall, Paraguay closed the year with an accumulated growth of 4.7%, outpacing Brazil’s 2.9%, Colombia’s 0.6%, Uruguay’s 0.4%, and Chile’s 0.2%. In stark contrast, other regional economies like Peru and Argentina faced downturns, with contractions of -0.5% and -1.6%, respectively.
The BCP report highlighted key sectors contributing to this growth, including manufacturing, where industries such as soybean oil, meat processing, milling, and textiles flourished. The livestock, forestry, fishing, and mining sectors also saw robust growth, with a notable 13.8% increase driven by higher levels of slaughtering and increased production of dairy and other agricultural products.
Services experienced a healthy expansion of 5.2%, supported by growth in household and business services, financial intermediation, hospitality, transport, and real estate. However, not all sectors shared in this prosperity. Construction remained in a slump, marking its seventh consecutive quarter of negative growth. Additionally, agriculture faced setbacks due to lower production levels of key crops like corn, sunflower, and tobacco.
While the macroeconomic indicators suggest a strong performance, the rise of the US dollar against the local guaraní has introduced inflationary concerns. The Association of Importers and Traders of Paraguay (Asimcopar) expressed alarm over the dollar’s surge, noting its potential to harm the purchasing power of Paraguayan consumers. This rise comes at a time when grain exports are increasing, a scenario in which the dollar typically weakens rather than strengthens.
Asimcopar’s statement emphasized the strain this currency fluctuation places on businesses, particularly those dependent on imports, such as fuel and other essential goods. The organization has called for swift intervention from the BCP to mitigate the risk of financial speculation and protect consumers from further economic strain.
Despite these challenges, the overall economic outlook for Paraguay remains positive. The increase in household consumption, as seen during the holiday season and the back-to-school period, indicates a resilient domestic market. However, with inflationary pressures on the horizon, careful management of monetary policy will be crucial in maintaining this growth trajectory.
This economic performance not only underscores Paraguay’s resilience but also highlights the complexities of navigating global financial currents in a developing economy. As the nation moves forward, balancing growth with stability will be key to sustaining its economic momentum.
Source: MercoPress, South Atlantic News Agency
