The result is due to the improvement of the labor market, the increase in credit levels and the greater arrival of remittances.
On the afternoon of this January 3, 2022, the manager of the Central Bank of Ecuador (BCE), Guillermo Avellán, announced the results of the National Accounts with a cutoff to the third quarter of 2021. The main conclusion is that the household consumption reached a increase sustained since the beginning of last year.
Thus, in the first quarter it increased by 0.8%, in the second quarter it grew by 14.8%, and in the third quarter it registered an increase of 11%.
With this behavior, the household consumption resumed levels pre pandemic despite the fact that the health crisis is still not completely overcome.
According to Avellán, the greater purchasing power of Ecuadorian families was the result of the conjunction of three factors: the improvement of adequate employment levels, the increase in credit and a greater arrival of remittances from national migrants.
In the case of loans, the official assured that the banks granted an additional 13% compared to 2020; while in the case of cooperatives, financing increased more than 22%.
The sectors with the greatest recovery, according to ECB statistics, were commerce (14% more) and accommodation and food services (38% more). On the external side, the main export industry was aquaculture and fishing (19% more).
However, sectors such as construction, which sustain around 60% of investment in the country, continue with a red balance and far from the levels prior to the pandemic.
Avellán assured that the Ecuadorian economy reached a total growth of around 4% in 2021; which represents a level higher than the initial projection of 3.5%.
Ecuador’s economic recovery is among the slowest in the region
Despite official optimism, Ecuadorian growth is one of the lowest in Latin America. Even with the new 4% recalculation, the country would only surpass economies such as Uruguay (3.2%) and Nicaragua (1.8%).
The closest neighbors of Peru and Colombia register increases in their Gross Domestic Product (GDP) of 13% and 8.6%, respectively. This means that they recovered their production and sales levels in just one year,
For Ecuador, however, the road is still long because in 2020 it suffered a drop of just over 8%.
In this context, last year it recovered around half of that collapse; and in 2022 it is expected to grow an additional 2.5%. Thus, an increase of at least 2.1% in 2023 will be needed to resume the size of the economy that was before the spread of COVID-19.
The underlying reasons for this slow recovery is that Ecuador has a too rigid work environment, a low level of business start-ups and a less open market than its main neighbors.
In addition, due to the irresponsible management of their public finances during the last 14 years, both the current and the previous governments did not have available resources to inject liquidity into the economy and even give direct aid to companies and workers.
The Ecuadorian economy had already had serious structural problems since mid-2015. In the four years prior to the pandemic, GDP growth averaged less than 1%. (JS)
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