Brazil & Southern Cone - March 2012 (ISSN 1741-4431)

On 7 March Paraguay’s centre for regulation and communications standards (Cerneco) held a conference on prospects for the Paraguayan economy in 2012. The keynote speaker was economist Alberto Acosta Garbarino, who gave a very sobering assessment. According to him, between the severe drought, which has wiped out 50% of Paraguay’s soya production; and the Foot and Mouth Disease (FMD) outbreak, the country is set to lose some US$1.5bn in revenues this year. Garbarino argued that to think that the economy will be able to post 3% GDP growth this year was “utopic”. More worryingly, he said that in his opinion the country was headed for zero growth in 2012 without discarding the possibility of negative growth. In this context, Garbarino said that a fiscal deficit for the year would not be a “bad” thing and he urged the government to increase spending to stimulate growth, lamenting the fact that it appears to be “in denial” about the crisis and has wasted time in implementing countercyclical measures. After the conference, Cerneco said it would seek to create a public-private alliance to promote countercyclical measures in congress in order to avert an economic collapse. Cerneco’s president, Enrique Brendaña, said that the idea is to get in touch with other private sector organisations and set up a task team that could work with the finance ministry or lobby congress to adopt countercyclical measures in this “difficult year”. According to central bank figures, the economy has been slowing down dramatically since 2010, when it posted real annual GDP growth of 15% on the back of a record year for the agricultural sector. In 2011 it slowed to 4.0%.  The central bank’s most recent forecast (December 2011) was for 3.7% real GDP growth in 2012.