1945

Per capita output declined in 1998 for the third year running, as the economy as a whole shrank (for the first time in 12 years) by 0.5 percentage points in the wake of weaker external demand and the ongoing financial crisis. The downturn in demand from Brazil (Paraguay’s main trading partner) led to a decrease in both formal and informal trade, while the liquidation of several banks that were in difficulties as a result of the banking crisis had an adverse effect on commercial and financial activities. The same factors dampened the demand for money and drove up the demand for hard currency, which caused the guarani to depreciate and thus fueled inflationary pressures.

Related Subject(s): Economic and Social Development
Countries: Paraguay
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