International banks project that Ecuador will grow between 4 and 4.5% in 2022
Optimism on Wall Street. After the approval at the technical level of the fourth and fifth reviews of the program with the International Monetary Fund (IMF) , which will give the Government financing for $1,000 million in June, if the Board of Directors of the organization approves it, international financial entities foresee a performance of the Ecuadorian economy in 2022.
Excessive compliance with fiscal goals and the increase in oil prices have opened a certain margin for the authorities to increase spending and continue to meet the goals of the program, the financial firm Barclays said in its report, issued to its clients on March 13. May 2022.
In this context, the Ecuadorian Government says Barclays, seems to have the opportunity to provide an additional stimulus to the economy, supporting its forecast of growth of the Gross Domestic Product (GDP) of 4%.
The figure is much more optimistic than the Central Bank of Ecuador (BCE) and the IMF itself, entities that have indicated that the country will grow 2.8 and 2.9% , respectively, this year.
Barclays predicts that the Ecuadorian debt will go down. The debt-to-GDP ratio fell to 63.6% of GDP last year and could drop to 60% this year. If that trajectory continues, debt could fall below 55% of GDP in 2023.
While Bank of America (BofA) is even more optimistic. The financial multinational points out that oil prices can boost growth despite the austerity of the Ecuadorian government. A strong rebound is expected in the second half, driven by higher public investment.
BofA maintains that they are optimistic about growth in Ecuador even despite their view that the Lasso government will be more disciplined with windfall profits from higher oil prices than the administration of former President Rafael Correa. “We expect growth of 4.5% in 2022 , above the consensus of 2.8%,” the financial firm noted.
Both entities recognize the political problems that the Government is going through, however, they point out that the risks of a cross death are low for now. Higher economic growth may help contain Lasso’s political problems, the firms say.