Ecuador: GDP crashes in Q2 on Covid-19 and low oil price fallout
September 30, 2020
The economy was pummeled in the second quarter on the double shock of the Covid-19 outbreak and low oil prices, with GDP collapsing 12.4% on an annual basis (Q1: -2.3% yoy). Q2’s reading marked the sharpest downturn since at least the year 2000 and the fourth successive quarter of contracting output.
Both domestic and external demand reeled in the quarter. Household spending plummeted 11.9% year-on-year (Q1: -0.6% yoy) due to Covid-19-related restrictions paralyzing activity and shuttering consumption. Similarly, capital spending plunged 18.5% in annual terms (Q1: -5.9% yoy) as construction activity, and machinery and equipment investment languished. In addition, government expenditure crumbled 10.5% year-on-year (Q1: -4.9% yoy) as authorities cut spending to reduce the budget gap in the face of plunging oil revenues.
On the external front, exports of goods and services tanked a whopping 15.7% on an annual basis (Q1: +3.4%) on the Covid-19-induced collapse in foreign demand, while imports similarly dived 20.8% (Q1: +0.1% yoy) as domestic demand was decimated.
On a seasonally-adjusted quarter-on-quarter basis, economic activity contracted a hefty 10.0%, after already shrinking 2.0% in the prior quarter.
Author: Javier Colato, Economist