Paraguay's 6.6% GDP Growth Masks External Vulnerabilities and Fiscal Constraints

The context

Paraguay continues to demonstrate economic dynamism with GDP expansion of 6.6%, positioning the country among Latin America's faster-growing economies. This growth trajectory occurs within a framework of managed inflation at 4% and relatively low unemployment at 4.8%, suggesting the economy is operating with considerable momentum. However, the growth model reveals structural tensions. Trade openness stands at 76.5%, reflecting Paraguay's deep integration into regional and global value chains, yet the current account deficit has widened to -3.2% of GDP while the trade balance shows a deficit of -2.1%. These external imbalances emerge despite exports reaching 37.2% of GDP, indicating that import growth is outpacing export performance—a common pattern when domestic demand accelerates faster than external markets can absorb local production.