ISTANBUL

Fitch Ratings affirmed Paraguay's long-term foreign currency issuer default rating at ‘BB+’ with a stable outlook.

The rating agency said Paraguay's rating is supported by the country's consistent macroeconomic policies, low government debt and robust external liquidity

Those factors, however, are balanced against weak governance indicators, a low revenue base, a shallow local capital market that narrows its fiscal financing flexibility and the country's vulnerability to adverse climactic shocks.

Fitch said it expects real GDP growth of 4.5% this year, down slightly from 4.7% last year. Real GDP is forecast to show growth of 4.5% in 2025 and 2026.

"While growth in 2023 was driven by a post-drought rebound in agriculture and electricity production, in 2024, it has been driven by the manufacturing and services sectors," it said in a statement.

"Large investments support Paraguay's economic diversification, which could help mitigate climate vulnerability," it added.