Ecuador: GDP expands at fastest pace in more than two years
March 31, 2011
In the fourth quarter, GDP expanded a robust 7.0% over the same period last year, which came in above the 4.5% increase recorded in the third quarter (previously reported: +4.3% yoy) and marked the strongest expansion since the third quarter of 2008. The acceleration over the previous quarter was broad-based, as both the domestic and the external sector improved compared to the previous quarter. Total consumption expanded 9.2%, up from the 8.2% increase recorded in the previous quarter (previously reported: +7.9% yoy), while gross fixed investment jumped from a 12.8% rise in the third quarter (previously reported: +14.2% yoy) to a 16.2% increase in the fourth. Meanwhile, the net contribution from the external sector improved over the previous quarter. Exports of goods and services swung from a 0.9% decline (previously reported: +5.7%) in the third quarter to a 8.3% increase, while imports slowed to a 16.4% rise from the 20.9% increase (previously reported: +23.5%) observed in the third quarter. As a result, the net contribution from the external sector to overall economic growth rose from minus 9.2 percentage points (previously reported: -7.4 percentage points) in the third quarter to minus 4.4 percentage points. At the sector level, the acceleration over the previous quarter was broad-based as all of the main sectors improved compared to the previous quarter. In particular, industry rose a strong 9.6% over the same period in the previous year (Q3: +3.4% yoy), while services added 6.8% (Q3: +5.1% yoy). Finally, agriculture expanded a meagre 0.7% in the fourth quarter, contrasting the 1.0% decline recorded in the third quarter and marking a return to positive territory after three quarters of contraction. A quarter-on-quarter comparison corroborates the acceleration seen in the annual figures, as the economy expanded a seasonally adjusted 2.64% over the previous quarter, up from the 2.03% increase (previously reported: 1.60% qoq) recorded in the third quarter. Based on annual figures, the economy expanded 3.6% in 2010, recovering from the sluggish 0.4% increase recorded in 2009 and coming in slightly below the Central Bank's forecast of 3.7% for 2010. According to the Central Bank figures, economic activity was negatively affected in 2010 by renegotiation of oil contracts between the government and private producers, which led to a decline in oil production and refining from the private firms (oil is the country's main export). The Central Bank expects that GDP will grow 5.1% in 2011.