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Tough Neighborhood Won’t Stop South America’s Fastest Economy

Tough Neighborhood Won’t Stop South America’s Fastest Economy

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Paraguay’s economic resilience in the face of troubled neighbors deserves to be rewarded with an investment-grade rating, according to Finance Minister Benigno Lopez.

South America’s fastest-growing economy will expand about 3.5 percent this year, roughly the same pace of 2018, even as Brazil and Argentina struggle with near stagnation or downright recession, Lopez said in an interview. Previously, the government had estimated growth reaching 4 percent in 2019.

“Paraguay is in a very tough neighborhood,” Lopez said, also citing domestic problems such as a drought that damaged soybean crops, followed by floods that hurt meat production. “But the good news is that we’ll be among the countries that will grow the most.”

Tough Neighborhood Won’t Stop South America’s Fastest Economy

Paraguay greatly relies on larger neighbors that are the destination for much of its agricultural exports. The country is trying to increase its growth potential beyond 4 percent with investments in infrastructure and education, as well as an overhaul of its tax system.

While two of the world’s three-largest ratings firms have Paraguay only one step below investment grade, investors showed the country deserves more by oversubscribing its latest global bond issue by more than six times, the minister said.

Lopez, who’s attending the meetings of the International Monetary Fund and the World Bank in Washington, D.C., said he will meet representatives of the ratings firms this week. “We come here every year and ask when they are going to give us the investment grade. I don’t want to ask anymore,” he said. “The recognition of the agencies will come sooner rather than later.”

To contact the reporter on this story: Walter Brandimarte in Rio de Janeiro at wbrandimarte@bloomberg.net

To contact the editors responsible for this story: Daniel Cancel at dcancel@bloomberg.net, Robert Jameson, Carolina Millan

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