Central Bank revises previous forecast, says economy will shrink 1.7 percent in 2016

In a revision of an earlier forecast that Ecuador’s economy would grow by 1 percent, the Central Bank said Thursday that it will in fact contract by 1.7 percent in 2016. The revision confirms the fact the the country is in recession.

Diego Martínez, Central Bank director.

The Central Bank said that the economic impact of the April 16 coastal earthquake, lower oil prices, and a strong U.S. dollar prompted the downward forecast but said that a recovery is already underway and it expects a return to positive numbers in 2017.

The bank expects the country’s oil sector to grow 0.8 percent due to an increase in crude output in 2016 by says the rest of the economy will contract by 2.6 percent.

Earlier this year, both the International Monetary Fund (IMF) and the World Bank predicted that the country’s economy would shrink by at least 4 percent in 2016, a number disputed by Ecuador’s government. Both the government’s new economic prediction or the IMF’s and World Bank’s would mean the worst year for Ecuador since the 1999.

Central Bank director Diego Martínez points to rising deposits and increased lending by the nation’s private banks as proof that the economy is beginning a turn-around.