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Brazil & Southern Cone - July 2011 (ISSN 1741-4431)

ECONOMIC OVERVIEW: PARAGUAY

In the first quarter of 2011, the economy grew 4.6% year-on-year. This brought the rate of growth over the previous four quarters to 11.8%, a bit below the 15% rate for calendar 2010. The economy has been growing at a decent rate since 2003, with only a slight dip between the third quarter of 2008 and the third quarter of 2009. The key issue for the economy is the size of the soya crop. Essentially, economic forecasts for Paraguay are the same as weather forecasts.
During his 1 July state of the nation address, President Lugo praised last year’s impressive economic growth, although he conceded that in spite of this, great social inequality persisted: “the needs and social demands surpass the state’s capacity of response in financial, human and institutional terms,” he said. Still, growth on that scale will raise expectations of a trickle-down effect. Lugo did not provide poverty figures for 2010 but those for 2009 (35.1%) showed a negligible improvement on 2008 (37.9%), when he took power. Indigence barely fell, from 19% to 18.8%, over the same period. Landless groups are also getting restless as Lugo has failed to deliver on land reform: on 5 July local authorities in the southern department of Alto Paraná declared a state of emergency in the wake of a series of land invasions.

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