* Growth picking up in soy-, beef-exporting country
* Inflation expected to near 7.5 pct upper limit in 2013
By Daniela Desantis
ASUNCION, Dec 21 Paraguay's central bank will
likely start raising interest rates next year as the country's
nascent economic recovery heightens inflationary pressures, the
president of the monetary authority said on Friday.
The soy-exporting nation's small economy grew 2.0 percent in
the third quarter from a year earlier and 3.1 percent versus the
second quarter, signaling the start of a rebound, official data
showed earlier this week.
Officials expect gross domestic product (GDP) to expand by
at least 9.5 percent in 2013 following this year's contraction,
boosted by a record soybean harvest and steadily improving beef
"In light of the dynamic that we're seeing, there will
likely be signs from the central bank at the start of next
year," central bank chief Jorge Corvalan told Reuters.
"The strongest signal will be on interest rates, but other
tools could also be used such as foreign exchange operations
(or) reserve requirements," he said.
Policymakers have kept the country's benchmark lending rate
on hold at 5.5 percent since September. It has been cut 300
basis points since August 2011 in response to the farm sector's
Despite this week's rosier data, the central bank still
expects GDP to shrink 1.5 percent this year although the
forecast will be revised in the coming days and "won't be quite
so negative," Corvalan said.
Inflation is expected to close 2012 at about 4 percent, but
prices look set to rise more briskly next year and come close to
the upper end of the central bank's target range of 7.5 percent,
(Writing by Helen Popper; Editing by David Gregorio)