Paraguay CB to Revise Growth to 4%

Paraguay’s economy should grow just over 4% in 2017, after expanding about 5.5% year on year in the first quarter, the central bank chief said, citing a limited impact on growth from a recent political crisis.

Central Bank Governor Carlos Fernandez said in an interview that the bank plans to revise up its growth forecast from 3.7% later this month to a figure closer to the 4.2% seen by the finance ministry.

“It will be ... close to 4% but above it,” he told Reuters in an interview on the sidelines of spring meetings of the World Bank and International Monetary Fund in Washington.

The landlocked nation, exporter of beef and soy, grew 4% in 2016 largely due to improvements in the industrial, construction and electricity generation sectors.

But fears of instability rose after protesters set fire to Congress last month following a secret vote by the Senate in favor of a constitutional amendment that would have allowed President Horacio Cartes to run for a second term.

Cartes, popular with investors for low tax policies and one of the region’s fastest growth rates, said on Monday he would not be a candidate in next year’s election in order to preserve stability and the amendment is no longer expected to pass the lower house.

“Business plans have not been affected, although maybe delayed to see how long this would last,” Fernandez said. He said the crisis only lasted two weeks, “not enough to change the investment perspective,” he said.

Paraguay raised $500 million in debt last month to finance infrastructure spending and pay off short term debt that was coming due.