The Paraguay economy is keeping a close eye on the US dollar’s movements, with recent fluctuations hinting at potential growth in the near future. The Paraguayan Central Bank (BCP) stepped in back in October to prevent the dollar from surpassing the ₲ 8,000 mark, allowing it to close at ₲ 7,760 by the end of November, marking a 1.2% decrease.
However, despite the BCP’s interventions decreasing in November, the year has seen a significant injection of US$ 1.476 billion into the financial system aimed at stabilizing the exchange rate. Interestingly, while most currencies in the region weakened against the US dollar last month, Paraguay’s guaraní appreciated by 1.2%. This positive trend is expected to continue, with projections estimating a closing rate of ₲ 7,900, slightly above the previous rate.
Looking ahead to 2024, experts forecast the exchange rate to hover between ₲ 8,000 and ₲ 8,250, signaling potential growth in the US dollar’s value against the Paraguayan guaraní. Amidst this backdrop, household and corporate debt levels have been on the rise, according to the latest BCP financial stability report.
Key points highlighted in the report include:
1. Household consumer credit has been steadily increasing, with an average growth rate of 12.8% year-on-year from 2016 to 2024, primarily driven by consumer credit.
2. Total credit to households has risen from 6.3% of GDP in 2016 to 10.5% in 2024, reaching one of its highest historical levels.
3. Corporate credit has shown positive growth, recording a 13.5% year-on-year increase in September, indicating a growth rate higher than previous years.
4. Credit granted to companies in various sectors such as services, agriculture, wholesale trade, and industry has contributed to the upsurge in lending activities.
These developments align with the overall GDP growth seen in the country this year, pointing towards a robust economic performance. As Paraguay braces for potential fluctuations in the exchange rate and an increase in debt levels, it is crucial for stakeholders to monitor the situation closely and implement strategic measures to navigate any challenges that may arise.
Leave feedback about this