Ecuador Economic Outlook
GDP likely grew at a slower annual pace in Q4 compared to Q3. In October–December, economic activity growth was almost flat, weighed down by weak output in October and a contraction in December. Credit growth also decelerated through December, while consumer confidence slipped from Q3 on average—likely dampened by the introduction of a state of emergency in two provinces in November amid surging gang violence—suggesting restrained private sector activity. Lastly, December’s double-digit spike in merchandise exports growth failed to fully offset a tepid performance earlier in the quarter. In Q1, economic growth is likely accelerating, with improving consumer confidence and lower inflation in January–February boding well for private spending. Meanwhile, in early March, the National Assembly approved the opposition’s proposal to trigger an impeachment process against President Lasso on corruption charges.
Inflation cooled to a ten-month low of 2.9% in February (January: 3.1%) thanks to a broad-based moderation in price pressures. The headline rate should average below current levels in 2023, as commodity prices soften and domestic demand eases. The economy’s dollarization will continue to anchor prices. Commodity price swings and supply-chain shocks pose risks.