Paraguay's 6.6% GDP Growth Outpaces Region Amid Narrow External Buffers

The context

Paraguay emerges as a notable Latin American growth story, expanding at 6.6% while maintaining moderate inflation of 4%. This performance occurs within a highly open economy where trade openness reaches 76.5% of GDP, making the country exceptionally sensitive to external demand and commodity price movements. The landlocked nation's economic model relies heavily on agricultural exports, hydroelectric power generation, and cross-border commerce with Brazil and Argentina. With GDP per capita at $7,000, Paraguay remains among the region's lower-middle-income economies, though its growth trajectory suggests convergence potential. The macroeconomic framework combines this expansion with controlled price pressures and a relatively tight labour market where unemployment stands at just 4.8%.