Paraguay’s Economy Grew 6.6% in 2025, Fastest Pace in 12 Years

Paraguay's economy expanded 6.6% in 2025, the fastest pace in 12 years and roughly 80 bps above the Bloomberg-consensus 5.8% forecast. Growth was broad-based with gains led by agriculture, power generation, services and construction, according to the central bank. The outperformance should support investor appetite for Paraguayan assets and reduce near-term downside risk to growth-sensitive sectors and sovereign credit metrics.

Analysis

Paraguay’s cyclical acceleration is likely to manifest as a net supply shock to agricultural commodities and as a re-rating of energy intensity economics in the Southern Cone. Expect incremental soy and beef flows from Paraguay to hit global export channels over the next 3–9 months, meaning a 3–7% downward impulse to regional basis levels (ex-Brazil/US ports) even if global demand is steady, and placing downward pressure on soybean processing margins in the US and China.

Cheap, abundant hydro generation — underpinned by the same investment wave that fuels construction — changes project economics for metal smelters, data centers and freezing/logistics capacity within a 12–36 month window. Industrial users can see delivered energy costs fall by an incremental 10–20% versus neighboring grids, which creates an optionality premium for firms able to sign long-term power offtakes; that can translate into new foreign direct investment and targeted M&A interest from aluminum/mining groups.

Near-term market catalysts to watch: seasonal weather (El Niño/La Niña) and a commodity price snapback are the fastest reversal risks (days–months), while policy shifts around land, tax or export controls are lower-frequency but higher-impact (months–years). For portfolio construction, the sweet spot is tactical commodity positioning + thematic mid-term exposure to fertilizers/energy-intensive industrials, while clipping downside with event-aware stops for weather/China demand surprises.

Key Decisions for Investors

• Short SOYB (Teucrium Soybean Fund) via a 3–6 month put collar or outright short: thesis is an incremental Paraguayan crop increase depresses regional soy basis and futures. Target -15% from current levels; stop-loss at +8%. Risk/reward ~1:3 assuming no major China restocking or adverse weather.
• Buy NUE (Nutrien Ltd) 6–12 month exposure, 3% position size: fertilizer demand in Paraguay and neighboring farm expansion supports volumes even if prices soften; take profits at +20%, stop at -12%. This plays higher fertilizer volumes from expanded planting and switching to higher-value inputs.
• Initiate a long call spread on AA (Alcoa) or a 12–36 month small-cap aluminum/midstream name with exposure to cheap power offtakes: optionality play on new smelter/logistics projects that lower unit cash costs. Allocate small, risk-defined notional; target 25–40% upside if management secures long-term power contracts.
• Tactical overweight EM local-currency sovereign debt via EMLC (VanEck JPM EM Local Currency Bond ETF) for 3–12 months while underweight more volatile regional credits (Argentina/Peru): capture carry while Paraguay-anchored flows support the guaraní and reduce headline sovereign risk. Close or hedge if regional contagion or EM risk premium jumps >150bps.