Elections Offer Turning Point Opportunity
Ecuadorians know that the 2017 electoral stakes are high: their choices could define the continuation or the end of a political and economic model that has lasted for 10 years, supported by many, but hated by many, too. The departure of a charismatic leader, the economic crisis and the vulnerability of the government’s new candidates pose an opportunity for the opposition, and a threat to the ruling government.
Yet the divisions among the three major contenders -- Guillermo Lasso of CREO, Cynthia Viteri of the Social Christian Party and Paco Moncayo of Izquierda Democratica -- reduce the prospects of each group, a situation that brings tranquility to the government. This is a difficult scenario, where the opponents seem on track for a vote-by-vote fight, only to end up as second runners up, with less than the feared 10% difference from the official candidate. Voters might also set aside their political preferences, and favor the more popular candidate. So far, though, it is not clear who this might be.
So, as the well-known political analyst Simon Pachano said: “Both scenarios sadly show that, thanks to the ideological biases of some, the arrogance of others, and the blindness of most, the abovementioned opportunity has become a threat.”
In the latest Central Bank data on Q2 GDP performance, we see some good news: the y/y drop of 2.2% was less pronounced than the negative 4% of Q1, and q/q change was even positive, at 0.6%. The bad news is that this is the fourth quarter of continuous annual y/y negative growth. Household consumption has also been down five quarters in a row, decreasing by 0.4% q/q and 5.9% y/y.
Most economic activities that depend on household consumption have decreased as well. Agriculture dropped 0.7% q/q; fishing fell 0.2%; construction by 2.3%; commerce by 0.1%, hotels and restaurants by 2.8%. Only shrimp, which depends mostly on external demand, performed positively in Q2, expanding 16.7% q/q.
While cumulative inflation of 1.19% speaks of economic contraction, INEC published data indicating stable unemployment, at 5.2%. But some 100,000 people lost their jobs in Q2, and 341,452 adequate jobs were also lost, raising underemployment from 14.8% to 19.4% --a loss that affects mostly Guayaquil and Ambato, two important centers of trade and commerce.
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