Year 2020: More of the same amidst a complicated political context
The slowdown in the economy continued in Q3 2019 with scant growth of 0.1% q/q and a decrease of 0.1% y/y. With these results, 2019 GDP growth might confirm the negative 0.5% we expect, leaving an unsettling economic environment during an electoral year, when the government will have to continue its fiscal adjustment to comply with the IMF goals.
The overall deficit of the General Government closed at 4.1% of GDP – $800 million higher than the initial official forecast of $3616 million for 2019, but continued its fall from the high 5% of GDP in 2016 and 2017. However, the adjustment weighed mostly on government investment, which is down 43.8% from 2018. On the other hand, the Non-Financial Public Sector overall balance and non-oil primary balance remained on track in Q3 2019 and will most probably achieve the 2019 goals of -$1187 million and -$1227 million, respectively.
Ecuador left OPEC with the aim of increasing oil production without the caps imposed by the cartel. The expected oil production for 2020 is 197 million barrels – four million barrels higher than the forecast for 2019 – an increase based on expanded exploitation of the ITT camps. The government raised approximately $1.4 billion in international investment in 2019 for the overhaul of mature camps and production from new ones. Also, the oil price per barrel was updated to an average of $53.5 per barrel for this year, which hopefully will increase oil revenues from $7127 million in 2019 to $8184 million in 2020.
The contraction of the economy was reflected in negative y/y and cumulative inflation of 0.66% and 0.7%, respectively, by November 2019 as well as by a decrease of 1.14% in imports. Thus, despite a small increase in non-oil imports of 4.3% and a decrease in oil exports of 3.4%, the balance of trade between January and October 2019 was positive at $132 million.
Judge Daniela Camacho ruled that Rafael Correa and several other high officials from the past government suspected of bribery in the “Arroz Verde” case must stand trial. Under the accusation of bribery, former President Correa and any other suspect who is currently out of the country may be judged in absentia. Should Correa be found guilty, he will be disqualified as a candidate for this and coming elections for any public position.
Now read on...
Register to sample a report