He The Central Bank of Ecuador has revised down the country’s economic growth forecast for 2023. The forecast is now at 2.6%, while the previous forecast was 3.1%. A decrease in exports, especially of oil, the winter season, as well as possible problems with stoppages that discourage possible investments and household consumption, would be the main reasons.

The news was announced by Central Bank Director Guillermo Avellán during the presentation of economic growth results for the fourth quarter of 2022 and annual growth for 2022, as well as projections for the current year. In this sense, Avellán said that the Central Bank calls with respect that any kind of problem can be solved through consensus and dialogue, and reminded that “political instability is the opposite of growth”.

Despite this drop in growth, Avellán said this forecast is double the average growth forecast for the region, which would be 1.1%.

The decline in the growth forecast is mainly explained by the oil problem. According to Avellán, the previous forecast found that oil production in 2023 would 188.00 million barrels were exported, but now the forecast has been lowered to 178,000 barrels, representing a 10% decline. In any case, he said that this decline will be compensated in some way by investing in public works both for the winter season and because of the planned Government plan, which is to provide funds for roads, education and health. In the first days of 2023, a series of problems were generated that affected production and exports: there was an interruption of the pumping of two oil pipelines (SOTE and OCP) as well as the declaration of force majeure, due to protests by indigenous communities living in the Amazon, near several oil blocks.

As for growth in 2022. Ecuador grew 2.9% of GDP, beating the September forecast of 2.6%. In this way, the GDP practically reached the level before the pandemic ($79,000 million). This result was contributed by the growth of household consumption by 4.6% and government expenditure by 4.5%, as well as the growth of exports by 2.5% and gross investments also by the same amount (2.5%).

Avellán also highlighted growth due to productive activities in 2022:

They were the weakest

Meanwhile, if only growth is considered in the fourth quarter of 2022, this is set at 4.3%. According to the ECB report, this growth was particularly driven by government spending (7.6%), exports (6.2%) and household consumption (3.8%).

On another topic, Avellán explained that the central bank’s international reserves are expected to decline by 2023. Those currently above $8000 million would end the year below $8000 million. The decrease depends both on the behavior of exports, especially oil, and on the arrival of resources from abroad, via debt with multilaterals ($3,200 million).

When Avellán was consulted about the proposals of certain members of the Pachakutik assembly to bring the Reserve, the manager took the opportunity to explain how the reserves are made up and to whom the resources belong. He indicated that 25% corresponds to monetary gold. As for the liquid part, the owners are private financial entities, from the national and solidarity economy, Gads, public banks. He explained that these resources are used by their owners every day. He further clarified that The Ministry of Finance has 314 million dollars in reserves, and taking into account all the Government’s resources, this reaches up to 1000 million dollars. He also reminded that the Monetary and Financial Code prohibits the ECB from delivering reserve funds to finance.