Ecuador’s economy to contract by 7.8% in 2020 due to pandemic

RIO DE JANEIRO, BRAZIL –  Ecuador’s economy contracted 7.8% in 2020 due to the coronavirus pandemic’s effects, which hit hard household and government consumption, investment, and exports, the Andean country’s economic authorities said Thursday.

The fall in Gross Domestic Product (GDP) in 2020 was less than the 9.5% projected by the International Monetary Fund (IMF) in the midst of the pandemic, but the negative rate recorded is one of the strongest contractions decades.

“Last year, the Ecuadorian economy decreased at 7.8% (…) this is undoubtedly a rate absolutely much more compatible with the effort that has been deployed and therefore is much more favorable,” said the Minister of Economy and Finance Mauricio Pozo to journalists.

“We have been able to weather the crisis thanks to international support because it has allowed us to keep economic activity moving and not have the original impact that was estimated,” he added.

By 2021, economic authorities expect the economy to recover and grow at least 3.1% significantly. Ecuador has a US$6.5 billion economic agreement with the IMF and credit with several multilateral.

The country’s central bank, for its part, said that last year’s negative result is explained by an 11.9% drop in investment, a 7% drop in household consumer spending, and a 2.1% drop in exports of goods and services.

However, the oil nation had positive foreign sales of products such as shrimp, bananas, coffee, cocoa, and fish, added the entity in a report published on its website.

Imports of goods and services were lower by 7.9% compared to those registered in 2019.

The central bank added that the oil sector had a contraction of 9.8% due to a deterioration in oil extraction performance. Domestic crude oil production in 2020 was 175.4 million barrels, 9.5% lower than in 2019.

The drop in oil production is associated with the Trans-Ecuadorian Oil Pipeline System (SOTE) damage in April. “Since then, it has experienced a slow recovery,” the central bank report said.

The non-oil sector also decreased by 6.6%, with a lower dynamism in industries such as transportation, accommodation and food services, and construction.

Source: America Economia

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