The “cold cloth” that the government puts in place with its economic measures – most of which are already in place – does not reduce the “fever” of Paraguay’s economy. The production thermometer continues to show that something is amiss, and if it continues like this, GDP will not close at 0.2% as estimated by the Central Bank of Paraguay (BCP), but could reach the negative scenario.
This situation was confirmed after the release of the monthly index of economic activity in Paraguay (Imaep), where differences indicate that monthly economic activity continues to “reduce”, falling by 4.7% again in May. This repeats for the fourth month in a row, in the first five months of 2022.
BCP data shows that so far this year, economic activity has accumulated a decline of 3.8%. In light of this, local analysts stressed the need to strengthen measures that encourage the economy in the short and medium term.
“Given the inflationary context constraining activity, the negative trend for Imaep is likely to continue as long as external shocks continue to exist,” said analysts at Mentu Advisory.
Meanwhile, BCP technicians argued that annual behavior was influenced mainly by negative performance recorded in agriculture, construction, and a portion of manufacturing and service activities. However, positive results from electricity generation and livestock farming mitigated the decline in economic activity.
Based on the latest available data from the Ministry of Agriculture and Livestock (MAG), agricultural activity has verified a significant decrease in its production levels, especially in soybeans, as a result of the adverse weather conditions (drought) prevailing at the end of the period. Before 2022 and early 2022.
Manufactures and services
In manufacturing, the activities that had the greatest negative impact were the production of oils, sugar, milling, bread and dairy products, and the manufacturing of metal products, leather, and footwear. However, these results were mitigated by the positive differences recorded in the production of meat, beverages, tobacco, chemicals, textiles, clothing, paper products, and the processing of common metals and non-metallic minerals.
Services, commercial activity, restaurants, hotels, business services and real estate services recorded positive performance. However, government services, transportation, financial intermediation, household services, communication and information services showed negative results. Construction showed a year-on-year decrease due to an increase in the number of rainy days in May, which had an impact on the lower rate of work completion.
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