The Paraguayan economy is poised to expand 11.3% next year propped by the strong recovery from agriculture according to Pricewaterhouse Coopers, an estimate far more optimist than the 9.5% of the government budget.
Exports should reach historic 6.8bn dollars in 2013 while imports will soar to 11.1bn but 4.5bn will be re-exported so the final balance is fair said PwC.
“Climate conditions are favourable and the crop is going to be very positive”, said Gaston Scotover, PwC associate during a conference for business leaders. Paraguay is the world’s fourth exporter of soybeans behind US, Brazil and Argentina.
“The second important element is the recovery of the meat market (following the outbreak of foot and mouth disease, FAM, at the end of 2011), and investments, both private as well as those planned by the government”
The consultants estimate that Paraguay’s economy this year will contract between 0.7% and 0.2% mainly because of the effects of drought on agriculture and the collapse of beef exports for sanitary reasons. The Paraguayan government estimates the contraction at 1.5%.
The impact was lesser than in other drought periods since international prices for commodities have remained sustainedly strong and help from an improved corn crop, said Scotover. In 2009 another year punished by lack of rains the contraction was 3.2%.
The non agriculture GDP this year will have an expansion of 2.5% and 3.9% in 2013. “This shows that independently from the primary sector, the other sectors of the economy are showing positive signs, leaving aside agriculture”.
PwC also anticipated that there should not be major variations with the exchange rate with small appreciations in the periods of greater revenue (March to June) with an average price of 4.400 Guaraníes per US dollar with a floor of 4.200 Guaraníes.
This year’s consumer inflation should be in the range of 3.1% but expectations for 2013 are that prices climb between 4.2% and 5.8% because of the demanding domestic market. Prices could be further affected if fuel prices, which are administered by the government suffer changes, concluded Scotover from PwC.