Expected disappointment
An economic downtrend this year has been evidenced in falling inflation and non-oil imports in the first five months. Recently published GDP data for Q1 confirmed this trend. Although y/y growth was positive at 0.7%, it is the lowest since Q2 2021, while the quarterly performance was the worst since 2016, with negative growth of 3.4%. Household consumption fell 2% q/q, government consumption fell 7.3%, GKF by 4.6%, and exports by 5.1%. Only imports, which increased by 0.6% versus 5.1% in Q1 2022, contributed less negatively to GDP in this quarter.
Employment remains relatively stagnant, with only 36.4% of the working population holding an adequate job despite the creation of 11,990 new adequate jobs between May 2022 and May 2023. It is not surprising, then, that according to several polls conducted in the past two months, unemployment is the number one concern at the individual level, while insecurity and violence is the highest concern at the national level.
RILD is down $656 million since December 2022, when it reached a peak thanks to multilateral disbursements. There is no evidence yet of capital outflow; it is rather the virtual absence of external disbursements and the dramatic fall in oil revenues that is behind this reduction. On the other hand, private transfers (exports and remittances) have partially muffled this trend. In fact, bananas, shrimp and mining products have been solid contributors to the trade surplus of the non-oil sector and have offset the decline in the oil sector balance, in which production continues to fall amid lower prices between January and May this year.
If the elections were held this week, a second round would be guaranteed, led by the candidate from Correismo, with around 30% of vote intention. On the other hand, second place is closely contested by Yaku Perez, Otto Sonnenholzner and Jan Topic, with percentages between 23% to 25% depending on the poll. Fernando Villavicencio—Correa’s harshest critic—is somewhat behind at around 20%, but with an upward trend.
Presidential debates do not have a strong impact on the rural vote, so since the polls collect their information mostly from urban areas, the next presidential debate, taking place on August 13, might impact the above numbers depending on the candidates’ answers to the two above mentioned main concerns of the population: insecurity and unemployment.
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