PARAGUAY · ECONOMY
Key Facts
- —What is happening Paraguay’s central bank raised its 2026 growth forecast to 5.0% from 4.5% and cut its end-year inflation forecast to 3.0% from 3.3% in its quarterly report on Friday, 16 October.
- —Why it matters Faster growth with falling inflation points to a stable economy for investors and exporters in a South American soy and beef producer, while the policy interest rate stays at a neutral 5.50%.
- —The numbers Growth is now forecast at 5.0% against 4.5% in June, inflation at 3.0% in December against 3.3%, and 3.5% in 2027, with core inflation at 2.2% for 2026.
- —Who is who The Banco Central del Paraguay (BCP) is the national central bank in Asunción; its Monetary Policy Committee sets the 5.50% rate, and its quarterly Monetary Policy Report, the IPoM, carries the forecasts.
- —What to watch Watch the next decision of the Monetary Policy Committee, the next quarterly report, and the monthly activity index, which averaged 6.1% growth in July and August.
- —Power Index Paraguay ranks 10th of 14 in The Rio Times Latin America Power Index, with 36.0 points (October 2026 edition).
- —What it means for you US exporters and investors see a growing market with tame inflation, but the bank flags oil above US$100 a barrel and a stronger dollar as risks that also reach US markets.
Paraguay’s central bank raised its 2026 growth forecast to 5.0% from 4.5% and cut its inflation forecast to 3.0%. The report, published on Friday, 16 October, credits industry, services and exports.
The Paraguay growth forecast for 2026 rose to 5.0% on Friday, 16 October, from 4.5% in June. The central bank also cut its end-2026 inflation forecast to 3.0% from 3.3%, below its 3.5% target.
The Banco Central del Paraguay (BCP), the national central bank, published the figures in its quarterly Monetary Policy Report (IPoM). La Tribuna, an Asunción daily, reported the upgrade the same day.
The bank kept its policy interest rate at 5.50% and calls that stance neutral. For US readers, the outlook describes a fast-growing South American market with inflation under control.
What Changed in the Paraguay Growth Forecast
Industry drives the upgrade. The secondary sector, which covers manufacturing, construction and power, is now forecast to grow 5.7%, up from 4.6% in June.
Electricity and water are forecast to grow 12.8%, up from 7.4%. Manufacturing and construction are unchanged at 3.9% and 3.5%.
Services, the largest sector at 48.9% of output, are forecast to grow 5.0%, up from 4.6%. Trade is revised to 5.1% from 3.5%, and general government to 4.1% from 2.6%.
Farming and ranching move the other way. The primary sector is now forecast at 2.9%, down from 3.8%, and livestock output is expected to fall 4.5%.
Cattle slaughter through September totals 1,363,697 head, against 1,735,841 a year earlier, a fall of about 21%. The bank’s presentation links the drop to ranchers keeping breeding cows back.
Exports and Government Spending Lift Demand
On the demand side, exports are forecast to grow 5.0%, up from 3.5% in June. Government consumption is now forecast to grow 4.5%, up from 1.5%.
Investment is forecast to grow only 1.3%, down from 2.2%. Private consumption, the biggest part of demand, is forecast at 4.1%, down from 4.3%.
Inflation and Interest Rates
Total inflation is forecast at 3.0% in December 2026 and 3.5% in December 2027. Core inflation, which the bank tracks as IPCSAE, is forecast at 2.2% for 2026.
The 5.50% policy rate was unchanged in the quarter, after cuts from 6.00% to 5.75% and then to 5.50%. The bank describes the rate as consistent with a neutral position.
What the Latest Data Show
GDP grew 4.0% year on year in the second quarter, after 7.3% in the first quarter. The monthly activity index, called IMAEP, averaged 6.1% growth in July and August.
The bank’s charts show unemployment at about 4.1% in the second quarter, and it describes credit as growing well. Exports rose 11.5% in the second quarter, while gross capital formation fell 18.2%.
Risks the Central Bank Flags
The bank lists a wider Middle East conflict, refinery disruptions and a stronger US dollar as external risks. Its presentation says Brent crude has stayed above US$100 a barrel since September.
Fuel prices are pushing inflation up, while non-energy goods are slowing. The bank says it will keep monitoring external risks and their effect on prices.
How Other Forecasts Compare
The IMF’s outlook of Thursday, 15 October, projects Paraguay’s growth at 4.5% in 2026 and 4% in 2027, ABC Color reported. The BCP’s 5.0% for 2026 is half a point above the IMF figure.
The BCP gave no 2027 growth figure in the material reviewed. For background on the country, see Paraguay in Latin America, Its Role and Alliances and the Asunción city guide.
What It Means for US Readers
Faster growth with inflation near target is the backdrop US exporters and investors look for in an emerging market. The central bank’s forecast is its own estimate, not a guarantee, and the IMF sees slower growth.
The oil and dollar risks the bank names are global ones that also move US fuel prices and markets. Travellers and businesses in Asunción face no change from the report itself.
What Is Not Known
The full report text was not readable here, so the figures come from the bank’s presentation and La Tribuna. No 2027 growth forecast was found.
It is not known whether the next policy decision will change the 5.50% rate. The Brent oil level and the Middle East risks are the bank’s own description, not independently checked here.
The bank’s chart notes give two figures for 2025 growth, 6.3% and 6.6%, so the base year is not settled. Local currency amounts do not appear in the forecasts.
Frequently Asked Questions
What is Paraguay’s new growth forecast?
The central bank now expects the economy to grow 5.0% in 2026, up from 4.5% in June. The new forecast was published on Friday, 16 October.
What is the inflation forecast for 2026?
The bank expects inflation of 3.0% in December 2026, down from 3.3% in June. It forecasts 3.5% for December 2027, equal to its target.
Did Paraguay change its interest rate?
No, the policy rate stays at 5.50%, which the bank calls consistent with a neutral stance. It was cut from 6.00% to 5.75% and then to 5.50% earlier.
Which sectors drive the upgrade?
Industry, services and exports lead the upgrade. The secondary sector is forecast at 5.7% and services at 5.0%, while farming is cut to 2.9%.
How does the IMF forecast compare?
The IMF’s World Economic Outlook of 15 October projects 4.5% growth for Paraguay in 2026 and 4% in 2027. The central bank’s 5.0% is half a point higher.
Sources: Banco Central del Paraguay, IPoM September 2026 and presentation; Banco Central del Paraguay, IPoM presentation event, 16 October 2026; La Tribuna, BCP raises growth forecast to 5%; ABC Color, IMF forecast for Paraguay (all accessed 16 October 2026).