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Economic downturn may be on the horizon in Ecuador

Wednesday, August 21, 2019

Subject

Economic challenges.

Significance

In the first quarter, Ecuador’s economy grew at its weakest pace since the 2016 recession. The government is facing significant challenges in implementing a recently agreed IMF programme, while President Lenin Moreno’s popularity has plummeted following unpopular, but arguably necessary, spending cuts.

Impacts

  • Dollar appreciation and a tightening of global financing conditions would weaken Ecuador’s competitiveness.
  • Short-term, the current account deficit will narrow, as rising oil prices support export growth and the slowdown weighs on import demand.
  • Moreno’s diminishing popularity will exacerbate uncertainty around implementation of the IMF programme.
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