2026/06/26 | Diego Ciongo & Soledad Castagna
Paraguay’s GDP grew a strong 5.8% YoY in 1Q26, easing slightly from 6.2% in 4Q25. On the supply side, growth was broad-based, supported by solid performance in services (6.6% YoY), manufacturing (6.0%), agriculture (8.2%), construction (5.6%), and electricity distribution (4.7%). On a sequential basis, seasonally adjusted GDP increased 1.9% QoQ in 1Q26, leaving a statistical carryover of 3.1% for 2026.
Domestic demand is showing signs of moderation in 1Q26. Domestic demand grew 4.8% year-over-year, decelerating from 6.7% YoY in 4Q25. This performance was mainly driven by a 4.8% increase in total consumption, supported by a 5.1% rise in private consumption and a 3.1% expansion in public consumption. Meanwhile, gross fixed capital formation grew 3.7% YoY, accelerating from 1.3% in 4Q25, mainly driven by investment in construction, as well as machinery, equipment, and motor vehicles. On the external front, exports of goods and services rose 3.1% YoY, up from 1.4% in the previous quarter, supported by higher shipments of soybeans, pharmaceuticals, oils, and vegetable-based products, partly offset by declines in re-exports (machinery and equipment) and in meat, electricity, beverages, and tobacco. Imports increased marginally by 0.3% YoY (from 3.3% in 4Q25), reflecting higher demand for fuels, vehicles, and chemicals, while declines were observed in services, machinery, and other manufactured goods.
Our take: We see upside risks to our 2026 GDP growth forecast of 4.0%, supported by a strong agricultural outlook, which should remain the main growth driver.