Paraguay Growth Forecast Raised to 4.7% by World Bank

PARAGUAY · ECONOMY

Paraguay is now expected to grow more than twice as fast as Latin America this year.

The World Bank has raised its Paraguay growth forecast for 2026 to 4.7%, from 4.4% in June. That is more than double the 2.2% it expects for Latin America and the Caribbean as a whole.

The Washington-based lender published the outlook on Tuesday, 6 October, and named Paraguay among a handful of countries outperforming the region. For US investors, it strengthens the growth story behind Paraguay’s dollar bonds, which two of three big agencies rate investment grade.

What the World Bank Said About Paraguay

The forecast comes from the bank’s Latin America and the Caribbean Economic Update, which it publishes twice a year. It projects regional growth of 2.2% in 2026, broadly in line with 2.4% in 2025.

The report says several countries making “sound and durable policy choices” are growing faster, consistently above 3 to 4%. “El Salvador and Paraguay continue to outperform the regional average,” it says.

The bank links that performance to “improved security conditions, fiscal consolidation, and robust private investment.” It also highlights Panama and the Dominican Republic, and expects Argentina to grow for a third straight year in 2027.

Susana Cordeiro Guerra, the bank’s regional vice president, said Latin America “has the potential to achieve stronger and more ambitious growth.”

How the Paraguay Growth Forecast Compares

The country figures were published by the Asunción dailies ABC Color and La Nación, citing the report. Both put Paraguay at 4.7% for 2026, level with the Dominican Republic.

Only Guyana, whose economy is driven by new offshore oil fields, is forecast to grow faster, at 23.7%, ABC Color reported. El Salvador follows at 4.5% and Panama at 4.2%.

For 2027 and 2028, the bank now pencils in 4.1% and 4.0% for Paraguay. In June it had 4.2% for 2027, La Nación reported at the time, so the outer years barely moved.

A simple yardstick shows why the gap matters. At 4.7% a year an economy doubles in about 15 years, while at the regional 2.2% it takes more than 30.

Debt and Ratings Are the Catch

The upgrade arrives as Paraguay borrows more. Public debt reached US$22.3 billion in August, up US$2.6 billion in a year, according to finance ministry figures reported by Última Hora.

About 83% of that debt is owed abroad, and nearly 70% is in US dollars, the same figures show. Former finance minister Dionisio Borda told the paper the core problem is low tax collection, at 11.2% of GDP.

Moody’s and S&P already rate Paraguay investment grade, ABC Color reported on Tuesday. Fitch keeps it at BB+, one notch below, with a positive outlook.

What It Means for You

For most US investors, exposure to Paraguay comes through the government’s dollar bonds held in emerging-market funds. A firmer growth outlook supports the country’s ability to service that debt.

The World Bank’s praise for security gains also matters in Washington. On Monday, Paraguay joined the US and eight other countries in warning of alleged Iranian plots in the Americas, Última Hora reported.

Paraguay designated Hezbollah, Hamas and Iran’s Revolutionary Guard as terrorist organisations in April 2025, the paper noted.

For companies weighing a move, the bank’s risk list is worth reading. It warns that El Niño could disrupt farming and hydropower, the two pillars of Paraguay’s export and energy model.

What Is Not Known

The World Bank press release does not list country forecasts, and the full report could not be opened. The Paraguay, Guyana and other country figures rest on ABC Color and La Nación.

The release also does not say why the Paraguay figure rose from June. It is unclear whether Fitch will follow Moody’s and S&P, or when stalled Itaipú tariff talks with Brazil will move.

What Comes Next

The World Bank will revise the forecast again in its next regional update, due in April under its twice-yearly schedule. Debt figures from the finance ministry arrive monthly.

A higher forecast is not a guarantee, since the bank says regional risks are “tilted to the downside.” Nor does it mean Paraguay’s debt pressures have eased, as borrowing is still rising.

Frequently Asked Questions

Why is Paraguay growing faster than most of Latin America?

The World Bank credits improved security, fiscal consolidation and robust private investment. It names El Salvador and Paraguay as countries that continue to outperform the regional average.

Is Paraguay investment grade?

Moody’s and S&P rate Paraguay investment grade, according to ABC Color. Fitch rates it BB+, one notch below, with a positive outlook.

What is the Itaipú dam?

Itaipú is a large hydroelectric dam on the Paraná River, owned jointly by Paraguay and Brazil. Its electricity and payments are a major source of income for Paraguay.

How big is Paraguay’s public debt?

Public debt stood at about US$22.3 billion in August, up US$2.6 billion in a year, finance ministry figures show. Nearly 70% of it is in US dollars.

Which Latin American economy is forecast to grow fastest?

Guyana, at 23.7%, thanks to offshore oil, according to the report figures published by ABC Color. Paraguay and the Dominican Republic follow at 4.7%.

Sources: World Bank press release, 6 October 2026; Banco Mundial, Spanish release; ABC Color; La Nación; La Nación, June forecast; Última Hora, public debt; ABC Color, ratings; Última Hora, Iran statement; Última Hora, Itaipú talks (all accessed 7 October 2026).