Paraguay's central bank now expects the economy to grow 5.0% in 2026, up from the 4.5% it projected in June, and has cut its year-end inflation forecast from 3.3% to 3.0%. The Banco Central del Paraguay (BCP) published the new GDP forecast in its September Monetary Policy Report (IPoM), presented in Asunción on Friday 16 October 2026. The number went up even though farming, the sector that carried the July upgrade, is now expected to grow less.
Photo: “Entrada principal del Mercado de Abasto de Asunción, Paraguay 2025” by Chipachyryry, Wikimedia Commons, CC0, cropped to 16:9 and scaled to 1600x900 (WebP)
What Changed in the 2026 GDP Forecast
The headline moves by half a point, but the composition moves more. Services are now expected to grow 5.0% instead of 4.6%, and inside them commerce jumps from 3.5% to 5.1% while government services rise from 2.6% to 4.1%. Industry and energy, the secondary sector, go from 4.6% to 5.7%. Almost all of that comes from electricity and water, now projected at 12.8% against 7.4% before. Manufacturing (3.9%) and construction (3.5%) did not change.
The primary sector goes the other way, from 3.8% to 2.9%. Crop farming holds at 4.7%. Livestock, which the June report still saw growing 0.1%, is now forecast to contract 4.5%.
| 2026 growth projection | June IPoM | September IPoM |
|---|---|---|
| GDP | 4.5% | 5.0% |
| GDP without agriculture and binational dams | 4.5% | 4.7% |
| Primary sector | 3.8% | 2.9% |
| Agriculture | 4.7% | 4.7% |
| Livestock | 0.1% | −4.5% |
| Secondary sector | 4.6% | 5.7% |
| Electricity and water | 7.4% | 12.8% |
| Services | 4.6% | 5.0% |
| Commerce | 3.5% | 5.1% |
| Government services | 2.6% | 4.1% |
Samuel Cañete, the BCP's director of macroeconomic analysis, said the revision "reflects a better performance of economic activity than previously expected", and that on the supply side "the greater dynamism of services, especially commerce, stands out" (our translation).
Why the Dams Matter for Paraguay's Growth Numbers
Paraguay's national accounts include the output of its binational hydroelectric plants, Itaipú with Brazil and Yacyretá with Argentina, and that output rises and falls with river flows rather than with the rest of the economy. That is why the BCP also tracks growth without agriculture and the binationals. On that narrower measure the forecast rose too, but only from 4.5% to 4.7%.
The gap between 5.0% and 4.7% is a useful reminder of how much of the headline sits in power generation and the weather behind it. The underlying economy is still growing well, a little faster than the bank thought in June. It is not growing 5% across the board.
Exports and the State Carry Paraguay's Demand Side
On the spending side the picture is similar. Exports of goods and services are now projected to grow 5.0%, up from 3.5%, a measure of volumes in the national accounts rather than the dollar value of shipments. Total consumption rises from 3.9% to 4.2%, but the lift is public: government consumption goes from 1.5% to 4.5%, while household consumption eases from 4.3% to 4.1%. Imports stay at 1.4%.
Investment is the weak spot. Gross fixed capital formation, the spending on buildings, machinery and equipment, is now expected to grow just 1.3% instead of 2.2%. The BCP's own comparison base is high, since fixed investment grew 12.2% in 2025. Still, economist Arnold Benítez put the tension in one line quoted by ABC Color: consumption sustains activity, "but investment will define future growth".
Inflation Forecast Cut to 3.0%, Rate Held at 5.50%
Prices are behaving even better than in June. Annual inflation stood at 1.7% in September, up from 1.5% in August but far below the 3.5% target, and core inflation was 1.2%. Prices rose 0.1% in the month itself, with beef, vegetables and fuel among the items that climbed.
The bank now sees inflation closing 2026 at 3.0% and core inflation at 2.2%, and expects a gradual return to the 3.5% target during 2027. It credits slower price growth in non-energy goods, both food and non-food, partly offset by fuel. Goods inflation slowed from 1.2% to 0.5% between June and September, while the measure that excludes food and energy rose from 1.1% to 1.5% in the third quarter, pushed up by services.
The Monetary Policy Committee kept the policy rate at 5.50% in July, August and September, the level it has held since February.
The Risks Paraguay's Central Bank Flags
The report lists tensions in the Middle East and threats to oil supply, which could push up fuel and other energy prices, with crude trading above US$100 a barrel according to Revista PLUS's summary of the report. It also names climate risks to farm output and to world food prices, and tighter financial conditions abroad.
The BCP is now the most optimistic of the three main forecasters. The IMF raised its 2026 projection for Paraguay to 4.5% in mid-October, with 4.0% for 2027, and the World Bank put this year at 4.7% on 6 October.
What the 5% GDP Forecast Means If You Live Here
For a foreign resident the useful part of this report is the inflation split, not the growth headline. Goods prices are barely moving, which is what you notice first at the supermarket checkout. Services are where prices are firming, and services are a large part of what people pay for after moving, from rent and restaurants to repairs and private healthcare. Our cost of living guide gives the current price levels.
Beef is the one item to watch. The September price report lists it among the products that rose, and cattle is the one part of the economy now forecast to shrink.
If you earn in dollars, the other number that matters is the gap between a 5.50% policy rate and 1.7% inflation. Real interest rates that high tend to support a currency, which helps explain the firm guaraní we reported on in August and the reduced spending power that comes with it for anyone paid in dollars. The same gap is what local bank deposits are priced against.
None of this changes the paperwork. Residency requirements, timelines and the cédula process are set by Migraciones and the Identificaciones police, not by growth forecasts, and the June forecast we covered in July was no different in that respect.
Frequently Asked Questions About Paraguay's 2026 GDP Forecast
What is Paraguay's GDP growth forecast for 2026?
The Banco Central del Paraguay projects 5.0% GDP growth for 2026 in its September Monetary Policy Report, published on 16 October 2026, up from 4.5% in June. The IMF expects 4.5% and the World Bank 4.7%. Excluding agriculture and the binational dams, the central bank's projection is 4.7%.
Why did Paraguay's central bank raise its GDP forecast while farming slowed?
Because services and electricity more than offset it. Commerce is now forecast to grow 5.1% and electricity and water 12.8%, while the primary sector was cut from 3.8% to 2.9% as livestock moved from expected growth of 0.1% to a 4.5% contraction. Exports and government consumption were also revised up.
What inflation does Paraguay's central bank expect for the end of 2026?
The central bank expects 3.0% at the end of 2026, down from 3.3% in June, with core inflation at 2.2%. Annual inflation was 1.7% in September. The bank expects inflation to return gradually to its 3.5% target during 2027.
Is Paraguay's central bank policy rate still 5.50%?
Yes. The Monetary Policy Committee held the policy rate at 5.50% at its July, August and September meetings, the level in place since February 2026, and the September report did not change it. The committee sets the rate at monthly meetings whose decisions the BCP publishes.
Deciding when to make the move to Paraguay? Economic forecasts change every quarter, but the residency steps do not. We can map out the cédula timeline against your own dates in a short call. Get in touch.
Disclaimer: This article reports official economic projections and is general information, not financial, investment or tax advice. Forecasts are estimates and are revised regularly. Check the current figures with the Banco Central del Paraguay before acting on them.
Sources
- ▹Última Hora: BCP eleva a 5% su proyección de crecimiento y reduce a 3% la inflación esperada
- ▹La Nación: El BCP eleva la proyección de crecimiento económico a 5 % para 2026
- ▹ABC Color: El BCP eleva proyección del PIB al 5%, ¿qué sectores impulsaron esta mejora?
- ▹La Nación: El BCP incrementa la cifra de expansión del consumo para 2026
- ▹Revista PLUS: BCP eleva a 5% proyección de crecimiento y reduce inflación al 3% para 2026
- ▹Banco Central del Paraguay: Informe de Inflación, septiembre 2026
- ▹ABC Color: Inflación en setiembre fue de 0,1% pese a subas de combustibles y carnes
- ▹La Nación: El FMI eleva a 4,5 % la proyección de crecimiento para Paraguay
- ▹ABC Color: Banco Mundial proyecta que Paraguay crecerá 4,7% en 2026
About the author
Yannick Schroth
Founder · Paraguay relocation support
Spends regular time in Paraguay and, with his team on the ground in Asunción, guides international nomads, entrepreneurs and investors through residency, the cédula and the RUC paperwork.
