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costs, and electricity production. These factors have been aggravated by the supply shock triggered by the war in Ukraine, given Paraguay’s dependence on imports of oil and derivatives. 4 Staff projects GDP growth at 0.3 percent for 2022, a 4.5 percent rebound in 2023, and 3.5 percent growth over the medium-term. The recent sharp increases in international fuel and food prices exacerbate inflation risks. Inflation is projected to converge back to the authorities’ target of 4 percent by end-2023, but end-2022 inflation would be above the central bank’s tolerance