Paraguay pivots to Asia while fiscal deficits pile up at home.

The opening of two new export markets on a single day —pork to the Philippines and poultry to Taiwan— crystallizes with unusual clarity the transformation underway in Paraguay's trade model: a country that for decades depended almost exclusively on soybeans and beef to generate foreign exchange is now diversifying its export base toward the Indo-Pacific in the midst of the renegotiation of the Mercosur-European Union agreement.

Both shipments are historic firsts. Pork to the Philippines and poultry to Taiwan do not represent volumes that will immediately move the needle on the trade balance, but they carry a symbolic and strategic weight that extends well beyond the containers dispatched. In a context where the Mercosur-EU agreement is in the ratification phase and Paraguay is demanding equal treatment on agricultural access quotas —rejecting a scheme that, according to Asunción, would treat the bloc's various members asymmetrically— the simultaneous opening toward East Asia sends a signal that the country does not depend on a single geopolitical vector to place its output. The soy complex generated USD 2.492 billion through May, according to Ministry of Economy data, and remains the anchor of the external sector, but processed animal protein is beginning to carve out its own space.

This diversification has industrial underpinnings. A new poultry processing plant with 6 MVA of power capacity will come online in the near term, indicating that the sector is not merely opening markets but simultaneously expanding installed capacity. The combination of sanitary approval in demanding markets —the Philippines and Taiwan have rigorous inspection protocols— with investment in productive infrastructure suggests that the shift is structural rather than opportunistic.

The macroeconomic backdrop framing all of this is robust, though not without strain. The Banco Central del Paraguay reported GDP growth of 6.6% for 2025 and 5.8% in the first quarter, figures the International Monetary Fund recognizes as solid, though it has adjusted its official projection to 4.4% for the year, flagging risks stemming from persistent informality —the underground economy is estimated at 40.3% of GDP— and pressures on social protection. The Fund is urging Asunción to deepen formalization as a condition for growth to be genuinely inclusive. On that front, the recent minimum wage adjustment has opened a broader debate: the mid-sized business association Asimcopar warns that an increase lacking technical criteria will curb investment, while economists note that the inflationary impact will be limited but that the more worrying effect is the disincentive to formalization in a labor market where half of workers remain informal.

The fiscal accounts add another layer of complexity. The Caja Fiscal accumulated a deficit of USD 182 million in the first five months of the year, interest payments on public debt rose between 12.9% and 16.8% depending on the measure, and the government is processing external loans in excess of USD 1.6 billion while exploring a new bond issuance, with the Ministry of Economy already having opened the window for creditor bids. In parallel, Treasury bonds in the local market total approximately USD 1.2 billion. President Peña included in his annual address progress on the electrical grid and multi-million-dollar investments, but critics point out that he omitted an accumulated debt to public works contractors of roughly USD 340 million —an omission that has not gone unnoticed in the construction sector, whose trade group Capaco is demanding a tripling of infrastructure investment. Execution of bilateral loans is another Achilles' heel: only 34.3% of available funds has been used, leaving USD 396 million undisbursed.

Within the financial system, consumer credit now represents 20% of the total bank loan portfolio, leading portfolio composition. The stock market moved USD 4.407 billion in the first half with signs of recovery in June. Family remittances contribute USD 732 million annually —USD 11.907 billion accumulated since 2008— and have become a quiet engine of domestic consumption and the real estate sector. Low inflation supports consumption, though a potential depreciation of the guaraní —a scenario analyzed this week by local economists— would complicate public accounts given the weight of dollar-denominated commitments.

On the energy front, Itaipú is advancing the certification of its first green hydrogen production unit, a move that plugs Paraguay into the global energy transition agenda just as fuels register a fresh rise on international markets. Petropar responded by cutting the price of regular diesel, absorbing part of the impact for end consumers, though the measure did not extend to other fuels.

In the coming weeks, attention will focus on three simultaneous fronts: parliamentary ratification of the Caja Fiscal reform, whose approval with amendments is expected this week according to Senate President Alliana; the package of seven new economic laws announced by the government, which would include regulatory stabilization measures; and the trajectory of trade negotiations with Europe, where Paraguay's stance of demanding equitable quotas will have to be weighed against the political will of Mercosur's larger partners. An economist consulted by ABC Color summed up the situation precisely: Paraguay needs stable rules to attract larger-scale investment, and that is exactly the scarcest public good that the current growth cycle has yet to consolidate.