July 25, 2019 / 8:04 PM / 4 months ago

Paraguay cuts 2019 growth forecast in half as crops hit

ASUNCION (Reuters) - Paraguay’s central bank on Thursday cut the country’s 2019 economic growth forecast to 1.5% from 3.2%, citing poor performance in the agricultural sector and external factors including trade problems in neighboring Argentina and Brazil.

“The forecast is being reduced mainly due to adverse crop weather and a more complicated and unfavorable international scenario affecting trade with Argentina and Brazil,” the bank’s chief analyst Cesar Rojas told reporters at a news conference.

The economic outlook will depend on a possible upturn in the second half of the year, he said. “This should be supported by countercyclical fiscal policies and also by a more lax monetary policy,” he added.

Paraguay’s finance minister told Reuters earlier this month that the previous growth target was coming under pressure mainly from weak soybean production caused by poor weather in the first half of the year.

The agriculture-driven South American economy’s most recent soybean crop fell more than 20% from the previous harvest due to adverse weather, official data show. Paraguay is the world’s fourth biggest exporter of soybeans.

Reporting by Daniela Desantis; Writing by Hugh Bronstein; Editing by Susan Thomas and Richard Chang

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