The Central Bank in Paraguay Improves Its Growth Projection for 2026 and Maintains a Favorable Scenario for the Real Estate Market

The Central Bank raised its GDP growth forecast for this year from 4.2% to 4.5%, while lowering its inflation projection to 3.3%. This new scenario combines stronger economic activity, stable interest rates, and controlled inflation, a context that continues to favor investment and real estate financing.

Banco Central del Paraguay (BCP)

The Central Bank of Paraguay (BCP) revised its outlook for the Paraguayan economy upwards when publishing the Monetary Policy Report (IPoM) for June 2026. The main change is an increase in the projected growth of the Gross Domestic Product (GDP), from 4.2% to 4.5%, accompanied by a reduction in expected inflation for the end of the year from 3.5% to 3.3%.

The combination of stronger economic growth and lower inflation is particularly relevant for the real estate market. Generally speaking, it implies an environment where economic activity continues to expand without generating inflationary pressures that would force the Central Bank to tighten its monetary policy, thus preserving favorable conditions for credit and investment.

The report highlights that the Paraguayan economy grew 5.8% year-on-year during the first quarter, driven primarily by services, manufacturing, agriculture, construction, and energy generation and distribution. From a demand perspective, growth was supported by private consumption, gross fixed capital formation, and net exports, while leading indicators suggest that the second quarter will also maintain positive performance.

In the specific case of construction, the Central Bank maintains a projected expansion of 3.5% for all of 2026. The institution attributes the observed performance mainly to the faster pace of private construction projects and the increased demand for domestic inputs used by the sector, confirming that the activity continues to be one of the key drivers of economic growth.

Another factor strengthening the outlook for the real estate sector is the evolution of credit. The Monetary Policy Report (IPoM) indicates that financing to the private sector continues to grow at a rapid pace. In May, total credit increased 15.3% year-on-year, while loans in local currency for housing remained among the most dynamic segments. Meanwhile, the General Credit Situation Survey shows that more than two-thirds of financial institutions consider the current situation favorable for granting new loans.

In monetary policy, the Monetary Policy Committee decided to maintain the Monetary Policy Rate (MPR) at 5.50%, the level reached after the cuts implemented in January and February of this year. The Central Bank argued that, while fuel prices exerted some upward pressure during the second quarter, inflation remains low and expectations are anchored at the 3.5% target, allowing the benchmark rate to remain unchanged.

One of the most significant changes in the report is precisely the downward revision of the projected inflation rate. The Central Bank of Paraguay (BCP) now expects the Consumer Price Index (CPI) to close 2026 at 3.3%, compared to the previously forecast 3.5%. According to the institution, the adjustment is mainly due to lower-than-expected inflation in non-energy goods, especially non-food items, while the economy continues to grow near its potential level without generating significant demand pressures.

For the real estate market, this scenario is particularly favorable because it combines several factors that typically drive investment: sustained economic growth, contained inflation, stable interest rates, and a financial system that continues to expand credit. Although the Central Bank warns that external risks persist, mainly associated with geopolitical tensions in the Middle East and the volatility of energy markets, the baseline scenario remains one of an economy that maintains strong internal momentum and stable macroeconomic conditions for the development of new real estate projects.