MercoPress. South Atlantic News Agency

Paraguay's Central Bank ups growth projections for 2024

“No significant imbalances are observed that could divert inflation from the expected trajectory,” the BCP stated

Paraguay's Central Bank (BCP) has this week upped the South American country's economic growth projection for this year from 3.8% to 4%. On the supply side, the main upward revisions were in the livestock, trade, and tax sectors, while downward adjustments were recorded in electricity and water amid higher domestic demand in line with the good dynamics imports have been registering.

 Livestock's figures were twitched from 1.6% to 5.4% given a higher slaughtering rate. “We are seeing a higher level of faneamiento, especially of cattle, but also of poultry and swine, which shapes the added value generated by this sector,” BCP Chief Economist César Yunis explained.

Commerce was also revised upwards from 4.9% to 5.1% due to better dynamics than expected in the previous report.

On the negative side, adverse weather conditions resulted in dwindling projections for electricity and water from -2.8 % to -4%, given the Paraguay River's historically low levels. Export expectations were also lowered from 1.5% to 0.4% amid fewer or smaller shipments of primary products such as corn. After adding smaller electricity sales abroad, Paraguay's trade balance is expected to stand at US$ -701.3 million.

“Agriculture maintained its growth projection of 1.8%. Although it presented a recomposition, where lower corn production is expected, wheat production would present a higher level than expected, compensating this dynamic,” the BCP also noted. Other activities, such as manufacturing, construction, general government, and other services, presented a dynamic in line with expectations, so their respective estimates have not been modified.

Domestic consumption is on a growing pattern. Hence, the BCP made an upward adjustment from 4.3 % to 4.7 % consistent with the good dynamism of imports.

In addition, the forecast expansion of gross fixed capital formation was revised upwards from 5.0% to 5.8% due to the good performance of investments in machinery and equipment while inflation projections for 2024 remained at 4 %. “No significant imbalances are observed that could divert inflation from the expected trajectory,” the BCP stated.