The projections are not encouraging. Like the World Bank, the International Monetary Fund (IMF) reduced its growth figures for the Ecuadorian economy for 2018 and 2019.
According to the World Economic Outlook (WEO) of the IMF, Ecuador’s Gross Domestic Product (GDP) would grow 1.1% at the end of this year and 0.7% in 2019. In April of this year, the Fund estimated that it would grow 2.5% in 2018 and 2.2% in 2019.
But it’s not only Ecuador. The IMF revised downwards the growth figure for the whole world. The agency projects a global growth of 3.7% for 2018-2019; that is, 0.2 percentage points less than the April forecast.
The IMF forecasts that in 2018, Latin America and the Caribbean will grow by 1.2% in 2018, a variation of -0.4 in relation to what was estimated in July.
“The projections are still favorable in the emerging economies of Asia and Europe, with the exception of Turkey, but they are anemic in sub-Saharan Africa, Latin America and the Middle East,” says the multilateral organization.
As a result of the little stagnation of the economy, GDP per capita measured at purchasing power parity (PPP, for its English figures) of Ecuador will have little growth in the next six years.
GDP or per capita income is an economic indicator that measures the relationship between the profitability of a country and its population. To calculate it, the GDP of the country is divided for the number of inhabitants.
Why is it important? The figure is often used to measure the level of wealth and welfare in a country.
For example, according to the Fund, in 2022, Chile’s per capita GDP will reach $ 30,000 and it will be the first in South America to reach that milestone. In five years, the indicator would rise more than $ 5,600.
While Ecuador is among the worst performing economies, along with Venezuela and Bolivia. In 2022, the country’s per capita income would reach $ 12,660. In five years it grew only 927 dollars.
For economic analyst José Orellana Giler, lower per capita income growth means that the economy will continue to grow at a slow pace and that is what the IMF wants to reflect in its projections. That is to say, Orellana Giler explains, the Ecuadorian economy grows at a lower rate than its population.
“The country has stagnated for these years (…) The sales of the companies depend a lot on the GDP per capita,” he says. (I)