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ECONOMY · PARAGUAY

The Paraguay economy grew 4.0% in the second quarter of 2026 compared with a year earlier, according to the central bank (BCP). That is a clear slowdown from 7.3% in the first quarter, though first-half growth still reached 5.7%.

Exports did most of the work, while investment fell sharply after a drop in purchases of crypto-mining machinery. For background on the country, see Paraguay Explained: The Country, Its Politics, Its Economy and What to Watch.

Cattle on a ranch in the Chaco, where much of Paraguay’s beef industry operates. Livestock output fell 4.1% in the second quarter as ranchers rebuilt herds. (Photo: Peer V, CC BY-SA 3.0 via Wikimedia Commons)

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A slower quarter after a fast start

ABC Color and Última Hora both reported the BCP’s quarterly national accounts on 25 September. The bank still projects 4.5% growth for 2026 as a whole, ABC Color reported.

Agriculture led, growing 11.1% on bigger soy, rice, bean, sunflower and tobacco harvests. Electricity and water output rose 13%, driven by power-hungry industries, Última Hora reported.

Livestock, forestry and fishing shrank 4.1% as ranchers slaughtered fewer cattle. Manufacturing grew only 1.8%, and services slowed to 3.4% from 7.9% in the first quarter.

Paraguay’s real GDP growth on a year earlier by quarter, Q2 2025 to Q2 2026; first-half 2026 growth was 5.7%. Source: Banco Central del Paraguay quarterly national accounts, 25 Sep 2026.

Trade carried the Paraguay economy

Exports of goods and services rose 11.5% on a year earlier, and imports fell 5.7%. Net external demand added 6.7 percentage points to growth, according to the BCP figures reported by Última Hora.

Domestic demand fell 2.6%, and gross fixed investment dropped 11.8%. The BCP linked that to lower spending on machinery, vehicles, aircraft and crypto-mining equipment.

Household spending held up, with private consumption up 3.2% and government consumption up 6.2%. Construction also grew 4.2% on more private building work, ABC Color reported.

Fitch keeps the outlook positive

On Wednesday (30 September), Fitch Ratings affirmed Paraguay at BB+ with a positive outlook, ABC Color and La Nación reported. Investment grade starts one notch higher, at BBB-.

Fitch cited growth of 6.6% in 2025 and public debt of 31.7% of GDP at the end of 2025, La Nación reported. It also flagged weak institutions, low tax collection and unpaid bills to state suppliers, ABC Color reported.

Fitch is the only one of the three large agencies without an investment-grade rating on Paraguay. Moody’s confirmed its investment-grade rating in July: Paraguay Keeps Moody’s Investment-Grade Rating Third Year.

Reserves and the guaraní

Net international reserves stood at US$11.44 billion on 28 August, up 9.1% on a year earlier. ABC Color reported the BCP data on 8 September.

Reserves were 2.2% lower than at the end of July. That dip still leaves them above the end-2025 level.

The guaraní traded at about 5,856 per US dollar on 1 October. The business paper 5Días reported on 28 September that it is the leading candidate to contest the top spot among the region’s currencies.

What Is Not Yet Known

The BCP’s April–June balance-of-payments figures were due on Wednesday (30 September). The current-account balance had not been reported by Thursday morning.

Rising exports and falling imports point to a firmer trade position. Yet the current account also includes income and transfer flows.

It is unclear whether investment will recover in the second half, and Fitch gave no timetable for its positive outlook. Its 4.5% forecast for the Paraguay economy in 2026 matches the BCP’s.

Sources: Banco Central del Paraguay quarterly national accounts, as reported by ABC Color and Última Hora (25 Sep 2026); Fitch Ratings decision, as reported by ABC Color (30 Sep 2026) and La Nación (1 Oct 2026); BCP reserves data via ABC Color (8 Sep 2026); 5Días (28 Sep 2026); exchange rate: open.er-api.com, 1 Oct 2026.

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