Ecuador: Economy grows at weakest pace since the 2016 recession in Q1
July 4, 2019
Growth decelerated for a second consecutive quarter in Q1, with annual GDP growth falling to 0.6% from the previous quarter’s 0.8%, marking the weakest expansion in two-and-a-half years. Moreover, output contracted in quarter-on-quarter terms, dropping 1.0% in Q1, following a 0.8% expansion in Q4 2018.
A pullback in domestic demand led the first-quarter deceleration (Q1: -0.2% year-on-year; Q4 2018: +0.8% yoy). Notably, fixed investment shrank 2.3% in Q1, after coming in flat in Q4 2018, on a fall in construction activity. Meanwhile, private consumption reported the weakest expansion in nine months (Q1: +1.0% yoy; Q4 2018: +2.1% yoy), against the backdrop of rising unemployment. Similarly, government expenditure grew at the slowest pace in two-and-a-half years (Q1: +0.3% yoy; Q4 2018: +4.1% yoy).
In contrast, the external sector gained steam in the first quarter, buffering the domestic downturn. Exports grew at the fastest pace in nine quarters (Q1: +3.5% yoy; Q4 2018: +0.6% yoy), while import growth slowed to 0.7% from 2.5% a quarter prior.
Author: Nicolás J. Aguilar, Economist