The Central Bank of Ecuador (ECB) has adjusted the basis of its economic growth projections for 2024, placing the expansion of the Gross Domestic Product (PIB) at 0.9%. This adjustment occurred after closing the second half of the year and responded to various factors that had a negative impact on consumer and business confidence.
In April, the ECB had estimated an increase of 1%, but has now decided to correct that figure. By comparison, the International Monetary Fund (IMF) expects an even more modest 0.1% increase for the Ecuadorian economy over the same period.
Among the reasons that led to this regulation is the decrease in imports of consumer goods, capital goods and raw materials. Furthermore, a decline in household growth and a deceleration in private inversion were observed. For example, the ECB had predicted that food consumption would increase by 0.7% in 2024; it is now estimated that this increase will be only 0.2%.
Brutal fixed capital formation, which refers to reversals in assets such as property and mechanical, has also undergone a significant overhaul. An increase of 1.3% was initially hoped for, but is now expected to be only 0.6%. Compared to exports, the growth forecast has been reduced from 4.2% to 2.4%.
The most drastic change was seen in imports, which, instead of increasing by 0.9%, are now expected to decrease by 0.8%. This drop in imports has been reported in recent data indicating a 6.5% drop in consumer goods imports and 10.8% drop in raw materials imports in early 2024, compared to the same period last year.
Ante this panorama, the ECB suggests that a reduction of atrasos in the public sector could inject liquidity and dynamism into the economy, thus facilitating the elimination of inversions and the improvement of consumption. Until July, the Government had allocated 415 million dollars to settle the two with the Gobiernos Autónomos Descentralizados (GAD) and 500 million dollars to the suppliers.
However, the ECB also warns you of changes that could affect these growth projections. The crisis in the electricity sector is a major concern, as it could affect both production and general consumption. Furthermore, high safety indices are affecting domestic demand and ultimately sales. Political uncertainty, especially in the context of the electoral process, also paralyzes business decisions and limits short-term reversals.
In summary, the ECB has revised its growth expectations for 2024 to baja, underlining the importance of addressing current economic returns and improving market confidence to estimate the reversal and consumption in the country.
