Paraguay’s Economy Grows Steadily as Services and Construction Lead Gains

Paraguay’s Central Bank reported that the country’s economy expanded by 4.9% in the first four months of 2025, with the Monthly Indicator of Economic Activity (IMAEP) showing a 3.3% year-on-year increase in April.

These figures highlight Paraguay’s ongoing economic resilience, even as global markets remain volatile and regional neighbors face mixed outlooks. Services and construction drove most of the growth.

The services sector, which includes finance, commerce, real estate, and hospitality, now accounts for nearly 40% of Paraguay’s economic output. Financial intermediation, household services, and transport all recorded strong performances.

Hotels, restaurants, and telecommunications also contributed to the positive trend. However, government services lagged behind, showing a decline.

Construction activity increased sharply, supported by both public infrastructure and private investments. The Central Bank noted that this sector grew by 4.9% in early 2025, creating jobs and boosting demand for materials and equipment.

Manufacturing also expanded, particularly in the production of oils, bakery goods, sugar, beverages, chemicals, textiles, footwear, paper, metals, and machinery. However, meat, dairy, and wood production fell, reflecting ongoing challenges in those areas.

The energy sector remains a pillar of Paraguay’s economy. The country benefits from large hydroelectric plants, Itaipú and Yacyretá, which export electricity to Brazil and Argentina.

Despite lower water flows in the Paraná River that reduced output, energy exports continued to provide significant revenue. Agriculture, traditionally a mainstay of Paraguay’s economy, declined due to reduced soybean yields after previous droughts.

Livestock production also dropped, especially in beef, milk, and eggs, although pork output increased and softened the overall decline.

Paraguay’s foreign trade balance showed a surplus of $32 million in the first quarter, thanks to a 1.4% rise in exports, led by beef, offal, and manufactured agricultural goods. Imports also grew, mainly due to increased purchases of machinery for construction and industry.

The Central Bank left its benchmark interest rate at 6% in May, citing stable inflation and steady growth. Inflation stood at 4% in April, with food prices as a key driver. The Bank projects GDP growth of 3.8% for 2025, with inflation expected to remain around 3.5%.

These developments matter because Paraguay’s economy is diversifying beyond agriculture, making it less vulnerable to weather and commodity shocks.

The country’s stable macroeconomic environment, growing services sector, and strong construction activity position it as a rising player in South America’s economic landscape.

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