Asuncion, Paraguay – Paraguay is bracing for a substantial economic blow as a severe drought grips the nation, with projections indicating losses of around $600 million due to plummeting soybean harvests. This figure, exceeding 1% of Paraguay’s Gross Domestic Product (GDP), signals a potentially far-reaching economic crisis.

Paraguay’s heavy reliance on agriculture makes it particularly vulnerable to climate-related shocks. The current drought is expected to have ripple effects throughout the economy, impacting farm incomes, consumer prices, currency stability, and overall purchasing power.

The anticipated decrease in agricultural output is poised to:

Reduce farm incomes, destabilizing rural economies.
Drive up food prices, adding to the financial burden on consumers.
Destabilize the national currency due to decreased export revenues, leading to higher import costs.
Diminish consumer purchasing power, potentially triggering a decline in domestic consumption.
In response, the Paraguayan government is implementing a range of measures to mitigate the drought’s impact and bolster agricultural resilience:

Improving soil and water management through the dissemination of advanced techniques, expansion of irrigation infrastructure, and enhanced water resource management.
Providing agricultural technology support through education, consulting, and the promotion of climate-resilient crop varieties.
Offering disaster relief to affected farmers through financial aid, emergency assistance, and crop insurance programs.
Promotion of actions to maintain productive rural areas through constant dialog with the various economic entities.
The increasing frequency of extreme weather events, such as droughts and floods, poses a significant challenge to Paraguay’s agricultural sector. The government is committed to building a sustainable agricultural system, developing climate-adaptive technologies, and diversifying agricultural practices to address these challenges.

The Paraguayan government has declared that they will continue to put in effort to overcome the damage done by the drought, and strengthen the countries agricultural competitiveness.