Projections show that Ecuador’s economy will grow by 2% in 2024, while the number of employed people in the region will grow by only 1%.

December sales reflected a jump from previous months due to Christmas shopping and the payment of the thirteenth salary to employees, but the level recorded in the same month in 2022 was not reached, some companies claimed.

The latest report of the Economic Commission for Latin America and the Caribbean (ECLAC) from December 2023 predicts a growth of 1.9% in the economy of Ecuador this year, which is expressed according to the level of increase in the gross domestic product (GDP) of the country.

The agency’s forecast is an increase in GDP of 2% until 2024. These forecasts were given in the framework of the regime change. The current President of the Republic, Daniel Noboa, assumed power on November 23, 2023. He will rule until May 24, 2025, that is, one and a half years with the possibility of re-election.

“According to the Preliminary Balance of the Economies of Latin America and the Caribbean 2023, the region will continue on its path of low growth, as it faces multiple challenges to stimulate growth in the short term,” the ECLAC report said.

Payments greater than $500 can no longer be made in cash, as required by the Economic Efficiency Act, if a deduction or tax credit applies.

This “will mean, among other effects, a slowdown in job creation and the persistence of informality and gender gaps.”

“The speed of expansion of economic activity continues to be conditioned by a highly uncertain international scenario (commodity price volatility, high global inflation and more restrictive financial conditions, among other factors), highlighted by the possibility of escalating geopolitical tensions.” .

“At the internal level (of Ecuador), the country’s economic performance is essentially based on the dynamism of personal consumption in an environment of lower inflationary pressures, a gradual recovery of labor indicators, higher credit placements and a sustainable expansion of remittances received, which contrasts with the very limited contribution of public and private investment that reduces the prospects for sustainable growth in the medium term,” the document added.

The total revenues of the non-financial public sector ($29,181 million) decreased by 1.8% between January and August this year compared to the same period in 2022, “due to the reduction of resources from the oil sector (-17.1%) and to a lesser extent tax collection (-3.2%).”

The SPNF includes the entities that make up the general budget of the state, i.e. those that belong to the 5 functions of the state (executive, legislative, judicial, electoral and transparency and social control), decentralized autonomous governments also belong to this group, public universities, public enterprises and social institutions security.

Oil revenues were affected by lower export prices and limited national crude oil production, according to ECLAC.

“Tax revenues were conditioned by the lower contribution of some indirect collection items, among which there are internal and external sources. In the case of the former, it is worth noting the reduction in the rate of foreign exchange outflow tax (ISD), and in the case of the latter, lower income from value added tax (VAT) and special consumption tax (ICE). ).) which refers to imports. Income tax, for its part, continued to show strong expansion (7.1%).

ECLAC raised its regional GDP growth projection for 2023 to 2.2%, but warned that the global macroeconomic scenario remains complex.

The forecast for 2024 is a regional GDP growth of 1.9%.

Bananas maintained their good results and in 11 months they increased in exports by 7%.

Growth forecasts for South American countries until 2024

Source: ECLAC

“Although all sub-regions will show lower growth in 2023 compared to 2022, the report highlights the heterogeneity that exists among countries in the region. Thus, South America would grow by 1.5% (3.8% in 2022), the group consisting of Central America and Mexico by 3.5% (4.1% in 2022), while the Caribbean (not including Guyana) would grow by 3, 4% (6.4% in 2022)."

By 2024, all subregions will grow less than in 2023: South America would grow by 1.4%; Central America and Mexico, 2.7%, and the Caribbean, 2.6% (not including Guyana).

"These projections reflect, on the one hand, the low dynamics of economic growth and global trade, which translates into a limited stimulus to the world economy. Although inflation has decreased, interest rates in the main developed economies have not decreased, so financing costs have remained at high levels throughout the year and are expected to remain so in the coming years.

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Forecasts show that interest rates paid by banks on deposits will continue to rise. In Ecuador, there are cooperatives that pay up to 13% interest for policies that are frozen for a year or more.

The employed population of Ecuador receives an average monthly salary of 444.5 in November 2023.

The service sector has become the main source of suitable jobs (52%) and offers the highest wages at the national level, says the ECLAC report.

“While there have been signs in the country that employment is recovering, the fact that inflation remains high, especially for food, and that quality formal jobs are few and far between presents a complex picture for most Ecuadorian workers. Indeed, high informality, low labor income and significant urban-rural, gender and age-group wage gaps persist in an environment of weak investment and low growth.”

The latest employment report from the National Institute of Statistics and Censuses states that the average earned income of employed people was $444.5 in November 2023.

Creating jobs will be one of the challenges in Ecuador and in the countries of the region. ECLAC estimates that the number of employees in the Latin American region will grow by 1.4% in 2023, which represents a decrease of four percentage points compared to the 5.4% recorded in 2022.

"This minor job opening will extend until 2024, when the number of employees is projected to increase by 1 percent," the ECLAC document says.

"It is necessary to increase productive development policies focusing on dynamic strategic sectors, promote policies to promote public and private investment and adjust the financing framework to improve resource mobilization," stressed José Manuel Salazar-Xirinachs, Executive Secretary. ECLAC.

The VAT rate of 0% for the import of poultry for fattening is returned

The Organization for Economic Co-operation and Development (OECD) also does not foresee promising growth in the region. In its latest report, it states that Latin America must adopt an ambitious and broad investment agenda to reduce poverty and extreme poverty.

ECLAC makes recommendations to Latin American and Caribbean countries to stimulate growth, create more formal jobs and move towards more sustainable development with a new investment agenda. The tips are:

The Central Bank of Ecuador (BCE) reported that the Ecuadorian economy recorded a growth of 0.4% in the third quarter of 2023 compared to the same quarter of 2022.

"This kind of behavior was encouraged by the 7.3% increase in exports; and government spending at 5.1%. The dynamics of exports were influenced by the increase in foreign sales of oil and natural gas, cocoa beans, and metallic and non-metallic minerals. On the other hand, the increase in government spending was directly related to the increase in the procurement of goods and services and to the payment of wages in the education and health sectors."

On the other hand, household consumption shows a negative year-on-year variation of 4.7%, due to a decrease in demand for products such as vehicles, textiles, clothing and dairy products.

At the industry level, only 9 out of 20 sectors reported a positive performance during the third quarter of 2023. Among the activities that showed the highest growth were:

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