Ecuador Private consumption

Economic growth eases in Q1

GDP growth hits a five-quarter low: Ecuador's GDP grew 2.1% in seasonally adjusted year-on-year terms in Q1, following 5.0% growth in the prior quarter. Q1's reading was the weakest since Q4 2024. In seasonally adjusted quarter-on-quarter terms, economic output increased 1.0% in Q1, following 3.0% growth in the prior quarter.

Net exports trigger deceleration: Compared with the prior quarter's data, figures in Q1 softened for government consumption (-3.8% in annual terms vs -0.9% in Q4) and exports of goods and services (+1.7% vs +13.8% in Q4). In contrast, readings strengthened for private consumption (+3.9% vs +1.1% in Q4), fixed investment (+12.8% vs +5.5% in Q4) and imports of goods and services (+11.1% vs +3.9% in Q4). Net exports were the main drag on economic growth this quarter. Trade tensions with Colombia worsened, and electricity and fuel costs soared as dry weather hampered hydroelectricity production.

Economic growth to remain capped in Q2: Our panelists anticipate that annual economic growth accelerated in the second quarter. Even so, the expansion is expected to remain below the average pace recorded over the past five years. Energy supply constraints remained a key headwind, as major hydropower facilities underwent maintenance in April while the trade dispute with Colombia continued into May. At the same time, elevated global oil prices—driven by tensions between the U.S. and Iran—only began to ease toward the end of June, following the signing of a long-awaited memorandum of understanding between the two countries earlier in the month. As Ecuador relies heavily on imported refined petroleum products, higher fuel costs will have continued to weigh on the economy in Q2. The situation was exacerbated by a March fire at the Esmeraldas refinery, the country's largest, which remained offline for nearly three months before resuming operations on 1 June 2026.

Panelist insight: Commenting on the 2026 outlook, Mauricio Monge, economist at Oxford Economics, stated: “We expect real exports to lead growth this year, supported by higher oil export volumes, and stronger investment should provide an additional boost. In contrast, private consumption is likely to lose momentum as households contend with higher inflation driven by the spillover effects of the Iran war, the removal of fuel subsidies, and the normalization of financial and labor market conditions.”

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