Paraguayan economy goes through “stagflation”

RIO DE JANEIRO, BRAZIL – For the first time in more than a decade, annual inflation in Paraguay closed March in double digits (10.1%), according to data from the Central Bank of Paraguay (BCP), while economic activity stagnated and the economy has not grown since last March. All this means that the Paraguayan economy is going through “stagflation”, according to economist Daniel Correa.

The former Vice-Minister of Economy of the Ministry of Finance mentioned when evaluating the economic scenario in the country that stagflation is a mixture of stagnation of the economy and very low growth, which also leads to price increases.

In communication with 780 AM, Correa warned that it is necessary to be very careful when making economic policy decisions. The ideal is to continue pushing public and private investment and generate confidence. He stated that inflation is here to stay for a not very long time, but at least for this and next year. “The Treasury’s coffers are in a very complicated situation, so tightening the budget, with possible increases in the public sector, could be dangerous,” said the economist.

On the other hand, Correa stressed that inflation is a worrying issue from a local and international point of view. It is impacting all economies in the region, he said. “There are external factors that are having a direct impact today and internal factors, which make this pressure of rising prices have repercussions on the family budget, on people’s pockets,” he said.

He added that inflation is a kind of discount made to the salary in terms of the capacity that one can buy. “When you go to the supermarket, you find out you can buy less and less,” he said.

The economist indicated that we were already getting used to stable and relatively low inflations years ago. “Brazil is in the same situation, close to 2 digits, Uruguay too. The US and Europe are also having this same oil impact. We have to remember that energy is a fundamental issue in people’s quality of life,” Correa specified.

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