Paraguay Revises 2025 Growth Forecast Upward on Services and Construction Surge

The Central Bank of Paraguay raised its 2025 GDP growth projection to 4.0%, up from 3.8%, citing stronger-than-expected performance in services, construction, and livestock.

This marks the second upward revision this year, reflecting resilience despite agricultural challenges from drought. Services now drive nearly 40% of economic output, expanding 4.0% as commerce, financial intermediation, and hospitality thrive.

Construction surged 4.9%, fueled by public infrastructure projects and private sector investments. Livestock grew 2.3%, bolstered by rising global demand for beef exports.

Agriculture faltered, with soybean yields dropping 1.4% due to dry conditions, though improved wheat and cotton harvests mitigated losses. Industrial output rose 5.1%, led by manufacturing gains in textiles and machinery.

Energy generation from hydroelectric plants Itaipú and Yacyretá remained stable, contributing 15% to GDP. Private consumption climbed 4.3%, supported by declining unemployment and wage growth.

Fixed investment jumped 4.5%, aided by Paraguay’s new investment-grade credit rating, which lowered borrowing costs for businesses. Inflation held at 3.8%, within the central bank’s target range, while poverty rates fell to 16.8%.

Paraguay’s Economic Growth

Exports grew 3.0%, led by meat and grains, though a stronger currency tempered competitiveness. Imports rose 2.8%, reflecting increased machinery purchases for infrastructure projects.

The economy’s diversification—reducing reliance on agriculture—has proven critical. Services and construction now offset volatile sectors, with non-agricultural GDP expanding 7.5% in early 2025.

“We’re seeing balanced growth across labor-intensive sectors,” said Central Bank President Carlos Carvallo, noting resilience against global trade tensions. Paraguay’s GDP reached $42.96 billion in 2024, with per capita income hitting $6,415.

The World Bank forecasts 3.6% growth for 2026, emphasizing the need for education and infrastructure investments to sustain momentum. Moody’s recent upgrade to Baa3 underscores investor confidence, though climate risks and commodity price swings remain challenges.

This upward revision positions Paraguay among South America’s fastest-growing economies, outpacing regional peers. With stable policies and sectoral diversification, the nation aims to solidify its role as a agro-industrial and energy hub while navigating global headwinds.