In January-April 2008 robust export earnings growth continued to outpace the rise in the import bill, curbing the widening of the merchandise trade deficit .

Country Report via NewsEdge :

In January-April 2008 robust export earnings growth continued to outpace the rise in the import bill, curbing the widening of the merchandise trade deficit (caused by the unfavourable export-import ratio). Although we expect export growth to slow in the remainder of 2008, mainly owing to a stronger base of comparison, it will remain robust, supported by firm economic expansion in Brazil and rising prices for Paraguay’s main export commodities. In 2009, as growth in Brazil slows more markedly and prices for Paraguay’s main export commodities decline, export value growth will decelerate more sharply.

Growth in the import bill will tail off in the remainder of 2008, as a result of slightly weaker consumer spending, although it will be partly supported by a further appreciation in the exchange rate. In 2009 a decline in import prices will underpin a more marked deceleration in import value growth. As a result of these trends, we expect the trade balance to post a small surplus in 2008, before it slips back into a marginal deficit in 2009. The current-account surplus is now forecast to decline at a slower pace to 4.4% of GDP in 2008 and 3.9% of GDP in 2009. The current transfers surplus is expected to decline on the assumption that growth in workers’ remittances will decelerate. Paraguay will continue to run a services surplus, stemming largely from its hydroelectricity exports. In recent years, Paraguay’s official current-account data have been subject to sharp revisions; this may still occur with 2007 data, which would have an impact on our forecast.