Paraguay Expected To Have Largest Economic Growth In Region

Via Eurasia Review, an interesting look at Paraguay:

Earlier this week, in an interview for ‘America Economia’ JP Morgan Economist Franco Uccelli, underlined the expected economic growth of Paraguay during this year, which could  be the highest growth in the region. The agricultural production sector is considered to be instrumental in the recently perceived economic growth, while the world’s economy is growing in a lower rhythm than expected. Mr. Uccelli also stated that Paraguay needs a high level of investments. Raw agricultural products will have a great positive impact in the growth of Paraguayan economy.

Despite having one of the smaller economies in Latin America, the International Monetary Fund estimates that Asuncion’s economy will grow at 11 percent in 2013, the Economic Commission for Latin America and the Caribbean (ECLAC) expect a 10 percent growth; on the other hand optimistic economists predict a 15 percent growth. The remarkable GDP growth this year is mostly due to the contracted economy last year, with the climate factors that have impacted most of the crops.

According to Franco Uccelli, the increase in public investment spending is also crucial for economic progress, that will bring benefits in the long run; “this is what Asuncion should be focused on in addition to restoring the inconceivable weather damages caused to the crops sector in the previous years.

2013 is expected to be successful and will have a steady growth especially the soybeans sector. On the other hand Paraguay’s economy is highly vulnerable from the climate effects and in order to overcome these obstacles there is a greater need to diversify the economy within the agricultural sector by producing seasonal fruits and building additional plantations of citrus and mango trees, in addition to corn, sesame, wheat and soy beans.

On May 9th, in a statement delivered in the city of Raul Peña, Alto Parana, the Paraguayan Minister of Agriculture, Rody Godoy stated that “grain production this year in the department of Alto Paraná is significantly increased with a record of 14 million tons. This means [Paraguay] is producing 10 times more than it can consume in the domestic market, this ranks the country as one of the most privileged places of being an exporter of grain and cereals.”

Minister Godoy, accompanied by Mrs. Celia Zárate, the city’s mayor, emphasized that Paraguay “is achieving economic growth thanks to the large return of crops’ production this year.” The Department of Alto Parana, is one of the most important departments of grain production, it has greatly contributed towards a successful national economic growth, while using its fertile red soil, and the labor of hard working farmers. Paraguay’s economic growth is not affected by the Political Sanctions applied by MERCOSUR Countries against the government of Federico Franco. For Mr. Godoy, “the World has a greater need for livestock and grain products, two premier commodities that are abundance in a nation that stretches from the dry Chaco region to the shores of Parana and Paraguay rivers.

Only last week, the National Bank of Paraguay, injected in the financial market USD 25 million. It is intended to reduce the speculative peaks in the currency exchange market, especially the US Dollar which has been very unstable. In Asuncion, only this week the Dollar rose up to 80 points reaching 4,330Gs. exchange rate for every Dollar. However this intervention caused the reduction of several points on the exchange rate, closing in late this week at 4,210 Gs. on the purchase of every US Dollar.

The National Bank of Paraguay reports that it sold USD 33 million to its customers and the institution purchased USD 17 million. This high volume of liquidity observed in the last weeks confirms an increase of imported products’ volume at this part of the year due to a political stability and good governmental management led by Paraguayan President Federico Franco Gomez.

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