Paraguay has been enjoying a relative political stability since 2013 while its foreign exchange reserves rose in the past years to arrive at a relatively high level (covering 8.4 months of imports at the end of 2016). Nevertheless, the ‘China of South America’, as this low-cost manufacturing hub is positioning itself, also saw a sharp increase of its short-term debt to close to half of its export receipts. This evolution negatively impacts the country’s liquidity position, especially as the current account balance is expected to turn into a small deficit due to infrastructure import while prices of important export products (e.g. soybeans and oil) are relatively low. For these reasons, Credendo has downgraded its short-term political risk classification to category 3/7.
16 Jul 2019
Historic EU-Mercosur agreement to have large impact on both trading blocs…if ratified
Event On 28 June, the EU and Mercosur (an economic trade bloc comprising Argentina, Brazil, Paraguay and Uruguay) announced that they reached a huge ...