Ecuador Economic Forecast

Ecuador Economic Outlook

January 17, 2017

Ecuador’s embattled economy continued to shrink in the third quarter of 2016, albeit at the slowest pace in a year. GDP fell by 1.6% annually, a marked improvement from the 2.2% drop observed in Q2. The recent rally in oil prices triggered by OPEC’s agreement to curtail oil production, which includes Ecuador’s pledge to cut output by 26,000 barrels per day, has barely provided any respite to the state’s coffers. These are becoming increasingly exposed to mounting interest payments as the country struggles to finance the fiscal gap for 2016. The price rally has, however, increased investors’ appetite for oil-levered credit. In a bid to capitalize on this renewed demand and ahead of February’s presidential election and any Fed interest rate hike, the government tapped the bond market twice between December and January for a combined amount of USD 1.75 billion at a yield of 9.65%.

Ecuador Economy Data

20112012201320142015
Population (million)15.315.515.816.016.3
GDP per capita (USD)5,1935,6656,0086,2976,078
GDP (USD bn)79.387.994.810198.9
Economic Growth (GDP, annual variation in %)7.95.64.63.70.3
Consumption (annual variation in %)5.74.34.23.50.3
Investment (annual variation in %)14.310.610.75.3-2.5
Industrial Production (annual variation in %)5.83.45.63.01.6
Unemployment Rate6.04.94.75.15.4
Fiscal Balance (% of GDP)-0.1-0.9-4.6-5.3-5.3
Public Debt (% of GDP)18.421.224.129.933.1
Inflation Rate (CPI, annual variation in %, eop)5.44.22.73.73.4
Inflation Rate (CPI, annual variation in %)4.55.12.73.64.0
Inflation (PPI, annual variation in %)12.5-3.43.8-19.1-12.9
Benchmark Interest Rate (%)4.534.534.535.185.14
Current Account (% of GDP)-0.5-0.2-1.0-0.6-2.2
Current Account Balance (USD bn)-0.4-0.2-0.9-0.6-2.2
Trade Balance (USD billion)-2.1-1.7-0.6-2.0-3.2
Exports (USD billion)22.323.824.825.718.3
Imports (USD billion)24.425.525.527.721.5
Exports (annual variation in %)27.66.54.63.5-28.7
Imports (annual variation in %)18.74.30.08.8-22.4
International Reserves (USD)3.02.54.44.02.5
External Debt (% of GDP)19.418.219.824.1-  

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Ecuador Facts

ValueChangeDate
Stock Market1,0561.32 %Jan 23

Ecuador Economic Growth

January 17, 2017

The outlook for this year will largely depend on the outcome of February’s presidential election. The new executive will have to deal with a country in desperate need of fiscal adjustment, which is plagued by an excessively costly external debt burden—considering its limited size—and weak macroeconomic fundamentals. Some consolation comes however from upside risks to growth including higher oil prices and a sizeable pick-up in Ecuadorian exports to the EU following the implementation of an FTA in January. Our panelists see GDP contracting 0.3% this year. In 2018, panelists expect the economy to grow 0.8%.

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