Economy shows signs of recovery but many businesses say they are not seeing it

Ecuador’s Central Bank reported Monday that the country’s GDP grew by 1.7% in the last quarter of 2016 and says it expects similar results for the first quarter of 2017.

Central Bank president Madeleine Abarca

During his Saturday “Citizens Link” television broadcast, President Rafael Correa claimed that Ecuador is “in full growth mode”.

“We experienced four consecutive quarters of negative growth in 2015 and 2016, but we began to grow again in the second half of 2016,” Correa said. “Technically, the recession ended at the end of last year.”

The economy contracted 1.5% in 2016, according to Central Bank director Madeleine Abarca. It was the first recession since Ecuador began using the U.S. dollar in 1999, she said, Central Bank data showed that of the 18 economic sectors it tracks, 10 had negative growth in 2016 while eight were in the black.

Abarca backed her optimism for 2017 but citing the last year’s winners.  “All aspects of the energy sector, especially oil refining, are seeing strong growth,” she says. “That sector saw 45.9% expansion during the last quarter of 2016.” She added the trade agreement with the European Union is also beginning to show results. “In the first three months of 2017, exports to the EU have grown 15%.

Her claim that the construction industry is beginning to recover drew a challenge from the president of Chamber of Construction Industry (Camicon), Silverio Durán. “Absolutely not true,” he said. “The industry has not even stabilized so how can they say it’s growing.”

Durán cited sales figures from the Ecuador Association of Real Estate Developers of Housing (Camicon), showing sales down by 47% in 2016 from 2015. According to Camicon, the sales slump is the result, primarily, of the fall in the price of crude oil, which continues to have a powerful ripple effect throughout the entire Ecuadorian economy.

A spokeswoman for Camicon said another factor affecting sales were new taxes on capital gains and inheritance eneacted in 2016 by the National Assembly. “This has further cooled the market but we are hopeful these will be reduced or eliminated by the new president (Lenin Moreno) as they relate to real estate,” she said. “This is what he has told builders and real estate professionals.”

The industrial and agricultural sectors say they are seeing signs of encouragement. “Exports of shrimp and bananas grew between 7% and 10% during the last quarter and we expect to see this continue,” said Andrés Robalino, director of the Chamber of Industries, Production and Employment of Cuenca.

On the other hand, says Robalino, sales of appliances, furniture, and other durable goods has fallen by 40%, year over year. “The industrial and manufacturing sector had a very difficult fourth quarter of 2016,” he said. “We have a long way to go before we can say the recession is over.”