Paraguay Raises GDP Growth Forecast to 5% in 2025

Paraguay’s Ministry of Economy and Finance has upwardly revised its projection for the country’s 2025 GDP growth, now forecasting expansion of approximately 5% by year-end.

The update was announced at a press conference by Minister Carlos Fernández Valdovinos following a meeting with President Santiago Peña at the Mburuvicha Róga presidential residence, positioning Paraguay among the fastest-growing economies in South America.

Despite a highly volatile international environment—marked by commodity price swings and global monetary tightening—Paraguay’s economy remains robust, driven by sectors that generate tens of thousands of formal jobs.

“Short-term indicators show a diversified, sustainable growth trajectory,” Fernández Valdovinos said, highlighting gains in construction, services, and industry.

Sectors Leading the Expansion

Construction: Public and private investment—especially in transport infrastructure and social housing—has spurred year-to-date growth exceeding 5%.

Services: Commerce, finance, and domestic tourism are benefiting from higher disposable incomes and labor market formalization.

Industry and Energy: Hydroelectric generation, the country’s main electricity source, has remained stable, while the food and beverage industry is seeing growing demand both domestically and internationally.

Agriculture and Livestock: Beef and soybean exports—bolstered by strong markets in China and the European Union—have driven more than a 6% increase in the sector’s added value.

Employment and Formalization

Formal job creation remains strong. Over the past 12 months, more than 100,000 new social security contributors were registered, bringing total formal employment to 810,000—a rise of 8.1% compared to 2024. The broader tax base and expanded access to financial services strengthen both public revenues and household purchasing power.

Regional Context

While neighboring economies slow, Paraguay demonstrates resilience thanks to a diversified production base and prudent fiscal management. Central Bank President Carlos Carvallo emphasizes that a “differentiated” monetary policy and inflation control maintain investor and consumer confidence, preserving purchasing power amid external shocks.

Outlook and Challenges

Local analysts warn that achieving the 5% target hinges on progress in structural reforms, particularly in logistics—such as upgrading highways and the Port of Villeta—and attracting new technology investments.

The Central Bank’s September report, which will publish the official forecast, is closely watched by markets. For international economists, Paraguay’s performance offers important lessons.

It shows how small countries can leverage natural resources and skilled labor to sustain growth in uncertain global conditions. With stronger tax revenues and a growing private sector, Paraguay is entering a virtuous cycle of investment and income generation.

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