Neighboring countries managed to overcome the fall of 2020, but Ecuador is in the group of those that did not. Experts analyze impacts of the omicron variant
The Ecuador’s economic growth figures in 2021 and 2022, with respect to other Latin American countries, look modest, according to the analyzes carried out by Citi representatives. This morning they made the growth forecasts for the Latin American economies Ernesto Revilla, Citi’s chief economist for Latam; Fernando Díaz, Ecuador and Southern Cone economist; and Esteban Tamayo, economist from Colombia, Peru and Central America.
According to the data, Ecuador will grow 3% this year and 1.5% in 2022. These figures are below those of other economies that did manage to recover what they lost in 2020. Thus, for example: Colombia will grow 9.5% in 2021, after its fall due to the pandemic in 2020 was 6.8%, and growth in 2022 will be 3.9%. Peru also traces its decline in 2020, which was 11.1%, and this year it will grow 13.5%. Other countries that did manage to compensate for the falls due to the pandemic are Brazil, Chile and El Salvador.
Meanwhile, Ecuador, which fell 7.8% in 2020, grows 3% in 2021 and by 2022 a rise of 1.5% would be expected. Uruguay, Costa Rica, Mexico and Argentina are also on the list of countries that, like Ecuador, failed to compensate for the decline in 2020..
According to experts, the explanation for the Weak growth in certain economies is due to the strong impact that the virus had on the population. Revilla said that the region had a third of the deaths in the pandemic, when it has only 8% of the population.
Additionally, a generalized problem seen in the region is the high inflation rates, above central bank expectations. However, on this issue there is an exception in the case of Ecuador, which maintains low inflation due to its dollarized economy. However, on the other hand, the existence of the hard currency makes Ecuador less competitive due to the impossibility of depreciating the currency, as other countries do.
Fernando Díaz explained that in the case of Ecuador the economy is recovering, especially due to the favorable external environment, that is, the recovery of the prices of comodities (raw Materials). Explain that for every $ 11 that the price of a barrel of crude rises, Ecuador rises one point in GDP. It highlights, among other issues, that the country has managed to accumulate reserves. He recalled that in April 2020 the reserves reached $ 2 billion, and now it has more than triple that amount. reserves also generate greater robustness in the financial system.
For the expert, the reduction of the deficit and an improvement in the fiscal accounts is the key to seeing a more virtuous scenario in Ecuador, but it is also important that new reforms can be carried out, this time labor, in order to make it more competitive and generate better growth. Another key factor for the Government is to be able to deal with the political challenge that implies not having a majority in the legislative benches.
About the effect the variant will have in the coming months omicron of COVID-19 in the region, experts indicated that it is still too early to know, since data is lacking, such as knowing its lethality. In any case, they consider that the countries that have advanced the most in vaccination will hardly have deep closings of their economies. In the case of Ecuador, they considered that there has been significant progress in this health process. (I)
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