La Nación They say it's too early to talk about the economic downturn, but expectations of a downturn have been added

Next April, the Central Bank of Paraguay (BCP) will release the official number of economic growth estimates, which will undoubtedly be lower than expected last December, according to its latest statement. Meanwhile, Minister Oscar Lamosas of the Ministry of Finance explained to the media that it is still too early to talk about an economic downturn; However, from the private sector they add with negative estimates for this year.

This is the consultancy MF Economy that has been added to the list of entities that have already forecast an economic downturn for this year, as a result of various factors, both internal and external. On this point, economist Manuel Ferreira, former finance minister, said the estimated growth value for this year in Paraguay is -1.8%.

For his part, Llamosas said he understands the drought will have an impact on GDP, but its severity is not yet known, because the soybean harvest is not over yet. He stressed at another point that the situation between Russia and Ukraine has not materialized yet, except for the suspension of meat shipments, but the sector can redirect this shipment to other markets.

RELATED TOPIC: BCP “Opens an Umbrella” and Expects It Will Lower Economic Outlook for 2022

Manuel Ferreira, economist and former finance minister. Image: file.

Weeks ago, the consulting company of the Brazilian group Itaú Unibanco also expected an economic decline in Paraguay of up to 1.8% for this year, as a result of the production crisis and climate problems.

The Foundation for Democratic Development (Dende) also estimated an economic contraction of 1.5% of GDP in 2022, which previously estimated a 3.0% expansion, mainly due to the negative impact of drought on agriculture, which will be transmitted throughout the economy. Meanwhile, in 2023, a rebound effect is expected that will leave an expansion of 8.5%.

Ferreira predicted that there would be a significant increase in the poverty rate. He explained that the causes would be drought, inflation and the Russian invasion, among others. We are seeing a negative result. We are at -1.8% estimated growth values so far. Basically, the impact of drought is very strong on the economy. Said the economist, in connection with Radio 1080, published by ADN digital.

However, he said other variables will also have an effect. “Inflation is also a variable that has to be taken into account for various reasons. On the other hand, a very restrictive monetary policy is being taken to try to control inflation, other than the fact that this is supply side inflation and it is highly focused on goods, not on what we call non-tradables, for services In general and very imported.He stressed that if you have expensive fuel, you cannot do much in the country, as all the used fuel is imported.

Read also: If it does not fall into recession, the economy will grow very slightly this year, warns former BCP chief