MercoPress. South Atlantic News Agency

Paraguay records highest economic growth in the region in 2023

Increasing household consumption is driving prices upward, also pushing the guaraní down against the US dollar

Paraguay's Central Bank (BCP) issued a report last week announcing that the country had recorded the highest regional growth in the last quarter of 2023, with a positive rate of 4.9%.

The BCP's Quarterly National Accounts report addressed the country's economic performance from October to December 2023 which showed a 4.9% expansion after 3.7% in the previous quarter and 1.8% in the last quarter of 2022.

With these figures, Paraguay closed 2023 with an accumulated growth of 4.7%, followed by Brazil's 2.9%, Colombia's 0.6%, Uruguay's 0.4%, and Chile's 0.2%. Peru experienced negative results with -0.5% and Argentina -1.6%.

The BCP study detected positive performances in manufacturing, soybean oil, meat, milling and bakery, beverages and tobacco, dairy products, and textiles and clothing.

Livestock, forestry, fishing, and mining sectors also grew by 13.8%, mainly due to a higher level of slaughtering (15%) in addition to increased production of raw milk and eggs, among other derivatives.

Services also expanded by 5.2%, driven by positive results in household and business services, financial intermediation, restaurants and hotels, transport, and real estate, among others.

On the other hand, construction closed its seventh consecutive negative quarter, and agriculture was hit by lower production levels of corn, sunflower, and tobacco.

In this scenario, the rise of the dollar against the local guaraní places the country under inflationary risk, according to an Association of Importers and Traders of Paraguay (Asimcopar) statement.

“Asimcopar highlights the damage caused to the pockets of Paraguayans by the unjustified rise of the dollar. This rise is taking place in a context of increased grain exports, a time when, contrary to what is happening, the price of the North American currency should be falling. This sacrifices the effort of multi-stores to support the prices of imported products,” the document read.

The increase in the dollar could also impact imports such as fuel and other basic inputs, for which BCP action was demanded.

“It is to be expected that the increase in the dollar will impact those imports that Paraguay makes on a daily basis such as fuels. For this reason, we understand that the monetary authority of our country must quickly carry out the necessary controls so that possible financial speculations do not affect all consumers,” Asimcopar noted.

“The country is showing a solid macroeconomic position that is visible in the national microeconomy with the increase in household consumption. During the past holidays and the beginning of classes, we have seen how sales have grown in the multistores, so we believe it is appropriate, given the current situation, not to let the upward trend of the dollar continue with its upward race,” the statement also pointed out.