ASUNCION, Oct 23 (Reuters) - Paraguay’s central bank cut its 2019 annual growth projection for a third time this year on Wednesday, to a tepid pace of 0.2%, as the farm-driven economy was buffeted by a global slowdown and tough weather for the agricultural sector.
The annual forecast has now been cut from 4.0% in December last year to 3.2% in April, and 1.5% in July.
The lackluster growth now expected for the year would, if realized, be the weakest since 2012, when the economy contracted 0.5%, also due to drought that hammered the agricultural sector.
“There is a spillover effect of agriculture in several sectors, including manufacturing, given that 40% of all soy production is processed,” Miguel Mora, a chief economist at the Central Bank, told reporters.
Historically low production of hydroelectric power also added to a fall of more than one-fifth in the soybean crop due to the climate and global trade uncertainty that hit exports.
“We have never seen so many shocks that have affected the Paraguayan economy in a single year,” Mora added.
According to the central bank, the primary sector will fall 4.7% this year, the secondary sector would contract 2.4%, while the tertiary sector would grow 3.3%.
On the demand side, foreign trade would fall 5.1%, while investments will contract 1.5%.
“The agricultural campaign that is beginning gives much better numbers, which are complemented by better international prices ... we are waiting for a recovery almost at normal levels, close to the potential of 4% for next year,” he said.
The Paraguayan economy grew 3.7% in 2018. (Reporting by Daniela Desantis; Writing by Adam Jourdan; Editing by Bernadette Baum)