Moody’s keeps Paraguay banking system stable

Moody's Investors Service said it is maintaining its stable outlook for Paraguay's banking system given the economy's slow but steady diversification, growing financial intermediation and improving institutional strength, according to a new report.

Low global prices for Paraguay's agricultural commodities and an increase in exchange rate volatility are the main risks for the country's growth outlook.

"We expect Paraguay's economy to grow at a steady 4.5% pace in 2015, driven by an expansion in domestic demand and in construction and manufacturing," Moody's assistant vice president Valeria Azconegui said in a news release.

Although Paraguay's banks remain heavily exposed to the agribusiness sector, growth in new industries such as light manufacturing and value-added export industries will create new opportunities and help to slowly diminish concentration risk, the agency said.

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