Paraguay has stood out as the country with the highest economic growth in the region during the last quarter of 2023, as revealed by the Quarterly National Accounts report of the Central Bank of Paraguay. With a positive rate of 4.9%, the country experienced an expansion that positioned it as a regional leader in economic dynamics for that year.
This notable increase contrasts with the modest growth recorded in the last quarter of the previous year, where Paraguay reached 1.8%. The country managed to rebound significantly, also exceeding the 3.7% of the previous quarter.
The real estate sector, sensitive to macroeconomic indicators, is influenced by this growth outlook. With the economy expanding, greater dynamism is expected in the real estate market. The increase in economic activity translates into greater demand for properties, both residential and commercial.
The report from the Central Bank of Paraguay highlights the positive performance of several key economic sectors, which directly affects the real estate market. Sectors such as manufacturing, livestock, forestry, fishing and mining, as well as services, registered significant increases in their activity.
In particular, the service sector, which includes real estate services, saw growth of 5.2%. This suggests an increase in demand for properties, whether for rent or purchase, as well as a boost in real estate brokerage and management activity.
The report also highlights the positive performance of manufacturing, with higher production levels in sectors such as soybean oil, meat, milling and baking, beverages and tobacco, dairy, textiles and clothing. This sector experienced growth of 9.6%, which may imply greater demand for industrial and commercial spaces.
Likewise, livestock, forestry, fishing and mining grew by 13.8%, driven by a higher level of slaughter of cattle, pigs and poultry, as well as an increase in the production of raw milk and eggs. This growth may generate additional demand for rural land and properties related to agriculture and livestock.
Despite these positive aspects, the report also points out some areas of the economy that showed contractions, such as the construction sector. With seven consecutive quarters of negative performance, the construction sector again presented a drop of 8.5% in its year-on-year performance. With this result, the accumulated variation reached a negative rate of 7.5% at the end of the fourth quarter of 2023. The behavior of the quarter was influenced by the lower pace of execution of public works, mainly related to the fiscal convergence plan. In this sense, a significant decrease has been observed in the demand for the main inputs used by the sector, especially the imported part (cement and asphalt).
Despite these challenges, private consumption has shown year-on-year growth of 3.1%, which indicates a greater spending capacity of the population. This can translate into an increase in demand for housing and commercial properties, thereby boosting the real estate market.
Regarding the regional panorama, Paraguay closed 2023 with an accumulated annual growth of 4.7%, placing itself as the leader in economic dynamics. Brazil, for its part, closed the year with a growth of 2.9%, followed by Colombia with 0.6%, Uruguay with 0.4%, and Chile with 0.2%. In contrast, Peru experienced negative growth of -0.5%, while Argentina closed with -1.6%.
In conclusion, Paraguay's leadership in economic growth within the region offers opportunities and challenges for the real estate market. Although the sector faces obstacles such as the slowdown in construction, the increase in economic activity and private consumption suggests a promising outlook for the real estate market in the country. Real estate market agents must be attentive to these changes and adapt to take advantage of the opportunities offered by Paraguay's economic growth.