Fuzzy Economic and Political Panorama
President Correa and the government are making all efforts to achieve in three months what they neglected to pursue in the past 10 years. The trade preferences with the European Union end in December and will cost the export sector $400 million. Correa is offering to compensate exporters for these losses if the trade agreement is not signed before the end of the year.
Vice President Glass, on the other hand, speaks enthusiastically about the “record” oil production expected from Block 43, part of the ITT oil camps, which, according to official estimates, have potential production of 23,000 barrels per day that would result in additional revenues of $100 million for 2016 and $750 million for 2017.
The above are some of the efforts the government is making to mask the economic recession that so far has left 150,000 people without a permanent job in the past year, with a severe contraction of demand for foreign products (imports have fallen 34% y/y between January and August) and domestic production, as shown by a decline of 1.96% in cumulative inflation to 1.04% during the period, below the 2% Central Bank rule of thumb for a healthy economy.
While bank deposits recover with a y/y increase of 6% (Jan-Aug), credit is still falling 3.6%, despite the efforts of the sector to increase supply to $10 b during H2 this year – another signal that the economy is not recovering as the government has been announcing during the last two months.
In the meanwhile, Ecuadorians have transferred the economic uncertainties to the political arena as only 35% of citizens have decided for whom they will vote next February 2017. From this group, poll results show that Guillermo Lasso and Cynthia Viteri have 22% and 14%, respectively, of voters’ intentions – numbers that have remained stagnant for the last three months. However, things have changed for Lenin Moreno, the official candidate, as recent polls put him at around 33%, down 9% from the original readings back in June after a scandal because of his role for the handicapped at the UN in Geneva, which has weakened his candidacy.
However, the large dispersion among the opposition group almost guarantees a victory of Alianza Pais, even if not in the first round.
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