The economy of Ecuador suffered a significant deceleration during 2018 and it is projected only a growth of 1.0% compared to 2.4% registered the previous year, according to a report of the Economic Commission for Latin America and the Caribbean (ECLAC) this Thursday, December 20, 2018.
“Without the strong fiscal stimulus of 2017, Ecuadorian economic activity slowed down as a result of a moderate contraction in oil production (-3.1%),” said the ECLAC Preliminary Overview.
An external scenario with greater financial volatility and rate increases by the Federal Reserve of the United States also contributed to these figures.
During the first semester, gross fixed capital formation expanded slightly (3.2%), at a lower rate than that registered in 2017 (3.3%), as did exports that grew by 0.8%, compared to 1.1% in 2017.
Fortunately, this was not reflected in the labor market or inflation, said ECLAC.
Unemployment remained low, with a slight decrease, and consumer prices started to come out of the deflationary period.
On the other hand, the current account of the balance of payments between January and June exhibited a deficit of 53 million dollars (against a positive balance of 317 million dollars in 2017).
This deterioration was the result of worsening balance of goods, income and transfers, which fell by 462 million dollars, 172 million dollars and 173 million dollars, respectively.
Likewise, international reserves were also affected by lower disbursements from external financing.
Up to October, these totaled 2,730 million dollars, compared to 4,806 million dollars the previous year.
In addition, the average of the reserves of the last six months is 24% lower than the previous six months, according to the ECLAC report.
During the first semester the most dynamic sectors were aquaculture and shrimp production, with an annual real growth of 10.2%; the water and electricity supply with 7.2%, and accommodation and food services, with 6.5%.
The contractions affected fishing (-4.3%), oil and mining (-3.5%) and oil refining (-21.9%).
Year-on-year inflation up to September 2018 reached a variation of 5.87%.
For the next year, Ecuador expects a slight reduction in growth (0.9%), basically due to a renewed pressure against the fiscal impulse, as a consequence of the end of the effect of the tax remission and a lower and volatile oil price. (I)