A dark fourth quarter, continued

ECUADOR - In Brief 19 Sep 2024 by Magdalena Barreiro

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As a follow up and complement to our monthly report for September, we present here the latest update from the Central Bank to forecast GDP growth this year. The Central Bank has downgraded y/y growth from 1% to 0.9% in view of the unpublished yet results for H1. Although we concur with a lower y/y growth, our estimate is more pessimistic at 0.5%. Household consumption, gross capital formation and exports will grow below the forecast by July this year, and imports could decrease instead of modestly increasing, as expected in the earlier estimates (Table 1). Source:  Central Bank, Elaboration of the Author On the industry side, the only possible winners would be fishing and shrimp, mining, public administration, education, health, and net taxes due to the increase in the VAT rate. The Bank also expects agriculture to be up 1.8% y/y instead of 0.95%, but we have serious doubts about this prediction given the losses already evident due to the severe drought, which will not turn around until the end of the year (Table 2). Source:  Central Bank, Elaboration of the Author In fact, the Bank explains its update focusing on those losses, plus the extra expenditures in security necessary to cope with a possible increase in violence during the coming blackouts and the productive losses that could result from these shortages, together with the customary slowdown in investment during an electoral period.