Domestic Demand in Ecuador
Economic growth picks up pace in Q4
GDP growth accelerated to 4.3% year on year in the fourth quarter from 2.7% in Q3. The improvement was broad-based, with growth in both domestic demand and exports accelerating.
Domestically, government spending growth more than tripled to 7.6% in Q4 (Q3: +2.1%). Additionally, private consumption—amounting to 65% of GDP—edged up to 3.8% in Q4 (Q3: +3.7% yoy). Household spending growth improved amid softer price pressures and a lower unemployment rate, though slower credit growth and moderating remittances growth capped the expansion. Fixed investment growth increased to 2.5% in Q4 (Q3: +2.2% yoy).
On the external front, the rate of growth in exports of goods and services almost doubled to 6.2% in Q4 (Q3: 3.2% yoy). Improving oil exports during the quarter—up 31.2% year on year—drove the expansion. Growth in imports of goods and services also strengthened in Q4, to 3.0% (Q3: +0.7%), pointing to firming domestic demand.
On a seasonally adjusted quarter-on-quarter basis, economic growth accelerated to 2.4% in Q4 (Q3: +1.7%).
Analysts at the EIU commented on the outlook:
“We will revise our forecast for GDP growth in 2023 upwards, from 1.3%, as the robust fourth quarter result will generate a positive statistical carryover into this year, but we still expect a sharp deceleration from 2022’s 2.9%. Moreover, our forecasts are subject to unusually high uncertainty, as [President] Lasso faces a high risk of leaving office before his term ends. This would weigh heavily on private investment and potentially complicate external financing, provoking macroeconomic turbulence.”
Ecuador Domestic Demand Chart
Ecuador Domestic Demand Data
|Domestic Demand (ann. var. %)||5.5||2.2||-0.9||-10.2||8.1|