Heat the olive oil in a pan or a dutch oven on high. Add the diced lamb, salt, and pepper, and brown all sides while stirring for 3 minutes.
Add the diced onion, pepper, carrot, potatoes, and garlic. Sauté them while stirring for 2-3 minutes until they are starting to caramelize. Add the paprika powder and combine everything.
Pour in the red wine and reduce the heat to medium. Let it simmer for 5 minutes.
Add the lamb stock, bay leaf, rosemary, tomatoes, and tomato paste. Stir until well combined.
Transfer everything from the pan to a casserole dish or simply put the dutch oven in the oven. Make sure the meat is fully submerged in liquid. Add additional stock if required.
Cook for 3 1/2 hours. The lamb should be extremely tender by now.
Let the goulash rest for 15 minutes, remove the bay leaf, and season with salt and pepper to taste.
You can adjust the consistency with 1 tsp cornflour dissolved in warm water if you're after a thicker stew.
Serve with a dollop of sour cream and a side of stewed potatoes. Enjoy!
Notes
If you prefer a thicker consistency, simply add 1 tsp of cornflour mixed in warm water or stock and bring it back to a boil to thicken the goulash.