GDP records fastest upturn since Q2 2023 in the first quarter

GDP expanded 1.2% on an annual basis in the first quarter, contrasting the 0.7% contraction logged in the fourth quarter of last year and marking the best result since Q2 2023. That said, this was only due to imports swinging into contraction. Underlying activity was downbeat, as private consumption, government consumption, investment and exports all shrank.

Household spending fell at a more pronounced rate of 1.1% year on year in Q1 following a 0.5% contraction in Q4, as spending on retail and transport fell amid the crime wave and national state of emergency declared by the president in January. Public spending, meanwhile, dropped 0.3% (Q4 2023: +1.0% yoy) on lower government employment. Fixed investment fell at a softer pace of 1.3% in Q1, following the 5.2% contraction logged in the prior quarter. Exports of goods and services fell 0.5% on an annual basis in the first quarter, which was above the fourth quarter's 7.4% contraction, driven by lower shrimp exports. Conversely, imports of goods and services deteriorated, contracting 3.3% in Q1 (Q4 2023: +16.2% s.a. qoq).

On the outlook, Oxford Economics’ Mauricio Monge said: “We've adjusted our forecasts for Ecuador's GDP growth by lowering the 2024 projection by 0.1ppt to 0.9% and raising the estimate for 2025 by 0.4ppts to 1.4%. […] The local VAT rate increase and prolonged high interest rates in the US will limit household spending and investment. Additionally, the oil ban in Yasuní Park from Q4 2024 onward will affect oil exports.” 

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