Ecuador: GDP rebounds in Q2
The economy bounced back in the second quarter, growing 8.4% in annual terms and contrasting the prior quarter’s 5.4% contraction.
The rebound was attributed to firming domestic demand. Household consumption bounced back, growing 10.5% year-on-year in Q2 (Q1: -3.0% yoy). Similarly, fixed investment jumped 9.8%, swinging from the 6.8% decline tallied in the previous quarter, as an accelerating vaccination rate and declining Covid-19 cases will have buoyed business activity. On top of this, public spending also returned to growth, as the government continued to deploy its fiscal tools to help support the pandemic-battered economy (Q2: +3.3% yoy; Q1: -8.0% yoy).
Meanwhile, the external sector continued to weigh on the headline reading, as growth in imports outpaced the expansion in exports: Exports of goods and services grew 16.0% in annual terms in Q2 (Q1: -2.9% yoy), while imports of goods and services jumped 22.3% (Q1: +1.4% yoy).
Lastly, on a seasonally-adjusted quarter-on-quarter basis, economic activity grew 2.1% in Q2, accelerating from the prior quarter’s 0.9% expansion.
Commenting on the outlook for the year as a whole, analysts at the EIU remarked:
“We expect real GDP to recover only modestly in 2021, expanding by just 2.4%. This reflects negative base effects (subdued growth in the fourth quarter of 2020 produced a mildly negative statistical carryover effect) and a restrained recovery in private consumption, hampered by a lack of fiscal support for consumers amid the Covid-19 crisis and a slow improvement in labour market conditions. Moreover, economic and political uncertainties will have dampened investment in the election-dominated first half of the year.”