Imports surge 7%, but customs revenue collapses 17% — Paraguay's growth mirage exposed.

The data point that best captures the state of the Paraguayan economy right now is also the most paradoxical: imports grew 7% in volume terms, yet customs revenues fell 17%. That gap, reported by ABC Color, distills into a single number the structural tension running through the country's growth model — a real expansion that fails to translate proportionally into fiscal revenue — and forces a more careful reading of the optimism surrounding the rest of the indicators.

Because the activity indicators are, indeed, remarkably positive. The Central Bank reported that the Monthly Economic Activity Indicator grew 5.6% year-on-year in May, driven by the services sector and agricultural activity. The International Monetary Fund, according to La Nación, projects that Paraguay will grow at roughly double the rate of global economic expansion in 2025 — a privileged position in a global context that the IMF itself describes as increasingly sluggish. Contained inflation reinforces that picture: low prices sustain real household consumption and give the Central Bank room to continue its monetary easing cycle. Private lender Itaú, according to Última Hora, anticipates that interest rate cuts will continue, which should further stimulate credit and private investment.

But returning to the customs paradox is essential. A 17% drop in revenues against a 7% rise in imports suggests two non-mutually-exclusive possibilities: a shift in the composition of imports toward goods with lower tax burden, or a deepening of under-invoicing and technical smuggling practices that have historically eroded Paraguay's public accounts. Either reading complicates fiscal management. The Ministry of Economy and Finance transferred 273 million dollars to departmental and municipal governments through June, a figure that reflects revenue-sharing obligations but takes on a different hue when foreign trade revenues are compressing so abruptly.

That pressure on public finances is also showing up in the decisions of the Administración Nacional de Electricidad. ANDE has reactivated its equipment tenders under a leasing structure, but with an overall cost that exceeds prior estimates by 61 million dollars, according to ABC Color. The leasing instrument allows for deferring the immediate budgetary impact, but it accumulates future commitments in a state-owned company whose financial situation has been under recurrent scrutiny. The decision says more about cash constraints than about a deliberate financing strategy.

On the external front, Paraguay is accumulating signals that point to a longer-range commercial diversification, though still in early stages. The first shipment of pork to the Philippines, finalized this week according to ABC Color, opens a route into Southeast Asia that complements the recent opening of the poultry market in Taiwan, highlighted by La Nación. Both milestones fit into a strategy of accessing Asian markets that gains strategic relevance to the extent that traditional destinations — Brazil and Argentina — offer more volatile demand. In fact, the devaluation of the Argentine peso continues to punish cross-border trade: the municipality of Alberdi, in the department of Ñeembucú, is recording a contraction in exchange with the Argentine side that illustrates, at a local scale, how the macroeconomic instability of the neighbor translates into a direct risk for Paraguay's border economies.

In the realm of digital infrastructure, the second 5G spectrum tender is moving forward with interested companies already identified, according to ABC Color, in a process that will define the country's connectivity architecture for the next decade and whose outcome will have direct implications for the competitiveness of the services sector — precisely the engine that contributed most to May's growth.

The Paraguay-Paraná Waterway, a central logistics artery for grain and manufactured goods exports, is at the center of a dispute that could have more immediate consequences. Soybean processors' chamber Cappro is demanding clarity on the tariffs and conditions of the new concession contract, while, according to Última Hora, industry associations warn that an excessive toll would erode the country's export competitiveness. Resolving that controversy is probably the most urgent economic policy variable in the short term: a poorly calibrated tariff on the waterway could neutralize part of the growth impulse that agriculture has provided.

What to watch in the coming weeks is precise: the trajectory of July customs revenues, which will confirm or qualify the 17% decline figure; the final decision on Waterway tariffs; the pace at which the BCP continues cutting rates; and the outcome of the 5G tender, whose winner will determine whether the telecommunications market becomes even more concentrated or whether real competition emerges. The macro picture is solid, but its fiscal foundations are more fragile than the growth headlines suggest.

**ANDE (state-owned, not publicly listed)** — Paraguay's state-run electricity utility reactivated equipment tenders under a leasing scheme with an overall cost overrun of 61 million dollars relative to prior estimates, raising the company's future financial commitments at a moment of fiscal tightness. The increase reflects both inflationary pressures on transmission equipment and the constraints on direct capital markets access that Paraguayan state-owned companies face.

**Itaú Unibanco (NYSE: ITUB)** — The Paraguayan subsidiary of Latin America's largest private bank projected a continuation of the Central Bank of Paraguay's rate-cutting cycle, anticipating a positive effect on credit demand and economic activity in the second half. The bank's view carries weight given Itaú's footprint in the local financial system and its exposure to rate dynamics across multiple markets in the region.