Paraguay’s Central Bank Maintains 4% Growth Forecast
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Loading... - AHMAD SALAH
- 07 Nov 2024
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The Central Bank of Paraguay (BCP) has reaffirmed its 4% growth forecast for the country's economy for the year, as reported after the October meeting of its Monetary Policy Committee. The bank's report indicates that the Gross Domestic Product (GDP) is nearing its potential levels, and the impact of local currency depreciation has been limited.
The BCP’s decision to uphold its 4% growth forecast follows positive developments across short-term economic indicators, which showed improvement in the months leading up to October. According to the bank’s latest Monetary Policy Committee (MPC) report, Paraguay’s GDP is performing near potential levels. The bank made an upward revision in September, adjusting its 2024 growth forecast from 3.8% to 4.0% due to these continued gains.
This forecast is notably more optimistic than the International Monetary Fund’s (IMF) projection, which predicts a 3.8% growth rate for Paraguay. The Central Bank’s outlook underscores a broader confidence in Paraguay’s economic resilience and in its ability to achieve consistent growth despite regional uncertainties and global economic pressures.
In terms of inflation, the BCP’s committee has maintained its forecast at 4.0%, noting that inflation trends remain aligned with target expectations. The MPC reports that the impact of external price changes, particularly in volatile areas of the Consumer Price Index (CPI) basket like food and energy, has moderated. This moderation has contributed to the stability of inflation, allowing Paraguay to avoid any immediate upward pressures that could destabilize the economy.
To this end, the Central Bank has closely monitored both domestic and international market developments, allowing for proactive adjustments. Recent declines in food and energy commodity prices have reduced inflationary risk from external sources, further supporting Paraguay’s inflation stability goals.
Several factors contribute to Paraguay’s current economic outlook:
i. Currency Stability: Although the Paraguayan currency experienced depreciation, the BCP notes that the effects have been minimal and well-managed, preventing any significant disruption to economic growth.
ii. Commodity Price Moderation: Paraguay, as a significant producer of agricultural products, benefits from stable or declining commodity prices, particularly in food and energy. This moderation aids in controlling inflation and sustaining economic stability.
iii. External Economic Environment: Recent global shifts, such as stabilized food and energy prices, have reduced volatility in Paraguay’s inflation outlook, allowing the Central Bank to retain a steady growth forecast.
The Monetary Policy Committee has reinforced its commitment to price stability, stressing the importance of vigilant monitoring of global and domestic trends. The Central Bank is prepared to take timely measures if any factors threaten to push inflation above the 4% target. By maintaining this approach, the BCP seeks to uphold confidence in Paraguay’s economic performance and prevent any shocks that could affect the inflation trajectory.
Looking ahead, the Central Bank’s 4.0% growth forecast for 2024 reflects confidence in Paraguay’s economic momentum and its capacity for sustained growth. This forecast takes into account global economic trends, potential inflationary pressures, and Paraguay’s adaptive monetary policy measures.
The Central Bank of Paraguay’s recent announcements highlight a proactive approach to economic management, aiming to balance growth, control inflation, and adapt to both local and global changes. As the year progresses, the bank’s commitment to stability will be essential in ensuring that Paraguay’s economy remains resilient in the face of evolving challenges.
