Paraguay's Economy Grows Strongly, But Consumer Debt Poses Risk

Paraguay's economy is demonstrating robust performance in the first half of 2026, with key sectors like agriculture, industry, and services growing even faster than the Central Bank of Paraguay (BCP) had projected. The BCP has consequently revised its annual growth forecast upward from 4.2% to 4.5%.

Economist and former Finance Minister Manuel Ferreira highlighted the strong agricultural sector, noting a record soybean harvest of 12 million tons, up from 10 million tons last year, coupled with higher prices. This agricultural boom positively impacts related industries such as transportation and logistics. The industrial sector, particularly agro-industry (producing oils, ethanol, and biodiesel), is also showing dynamism. However, Ferreira pointed to a contraction in the meat industry due to reduced cattle slaughtering, attributed to previous low prices and drought impacting the herd.

Despite the positive macro-economic trends, Ferreira expressed concern over the rapid growth of consumer credit. He warned that household debt is increasing at a pace exceeding overall economic expansion, posing a significant challenge to family finances and potentially creating future economic instability. While non-agro-industrial sectors, including the maquiladora (in-bond export) industry, are performing well, Ferreira noted that Paraguay faces challenges in competing with the U.S. due to unfavorable exchange rates, despite Brazil's trade disputes with the U.S.

The construction sector remains an important contributor to the economy, though it faces certain hurdles. Ferreira's analysis suggests a mixed economic picture: strong overall growth driven by key sectors, but with underlying risks stemming from increased household indebtedness.