Ecuador: Economic activity growth dips in February
Economic activity increased by 0.5% in February compared to the same month of the previous year, down from 2.1% in January.
Meanwhile, annual average economic activity growth softened to 4.4% in February (January: +5.3%), pointing to a weakening trend.
Looking ahead, the economy is set to grow at a slower pace this year compared to 2022. Activity will be supported by elevated oil prices, buoying government coffers. However, this will fail to offset downside pressures from elevated inflation and higher interest rates, which will dampen private spending and investment. Political instability amid social unrest and efforts to impeach President Lasso will further hinder growth prospects. A decelerating global economy will weigh on trade.
Analysts at the EIU said:
“The biggest downside risks to our GDP forecasts are internal political instability and a deteriorating global economic outlook, particularly in 2023, if major economies struggle more than we expect or if the recent banking sector stress in the US and Europe escalates into a full-blown crisis throughout the financial system, causing oil prices to plummet.”