MercoPress. South Atlantic News Agency

Paraguay’s poverty index forecasted to reach 40% because of recession

Minister Borda defended the government’s policies to create jobs and stimulate the economy. (Minister Borda defended the government’s policies to create jobs and stimulate the economy. (Photo AP)

After having declined sustainedly during the last few years, Paraguay’s poverty index is forecasted to soar to 40% of the population in 2009 because of the economic recession, said on Thursday Economy minister Dionisio Borda.

According to Paraguayan government estimated the GDP will contract this year 3.8% as a direct consequence of the global crisis and an awful drought which has had a devastating impact on agriculture, the powerhouse of the country’s economy.

“If economic activity falls, this means it’s going to create more poverty…and most probably it will again jump to the 40% index, said Minister Borda during an interview with a local Asunción broadcasting station.

The index had contracted to below 38% in 2008 from over 40% in 2003, during a period of bonanza for farmers which saw international prices soar and a considerable increase in farm and cultivated areas.

Paraguay, a junior Mercosur member has become the world’s sixth producer of soybeans, the world’s fourth exporter and a significant supplier of beef particularly for neighbouring countries. Agriculture represents 30% of the country’s GDP.

Borda admitted that the situation would cause an increase in unemployment in the informal sector and supported the government’s plans to create jobs and invest stimulus funds to promote public works.