Economy shows surprising 2nd quarter growth

Ecuador’s economy grew at an unexpectedly strong rate of 3.3% in the second quarter of 2017, the central bank reported Friday.

Central Bank Director Veronica Artola

Although bank director Verónica Artola was expecting growth of about 2%, strong numbers in consumer spending, telecommunications and transportation of goods, due to growth in imports, fueled the higher number.

Exports, especially of flowers, fish, bananas, and other agricultural products also boosted the bottom line.

Ecuador’s strong growth came at a time when other economies in the South America are slowing down. Second quarter growth for Chile was 1.3%; in Colombia, 1.3%; in Argentina, 2.9%; in Uruguay, 2.9%, and in Peru, 2.4%.

According to Artola, the 13.2% increase in household consumption is a double-edged sword. “We welcome the growth but don’t want too much of it since it means an outflow of money from the country,” she said. She attributed the higher rate of consumer spending to the elimination of the surtax on imports and the trade agreement with the European Union which went into effect at the beginning of the year.

Artola conceded that the economy still has a long way to complete recovery from the recession that began in 2014. “The latest numbers show that we’re on the right path and that we’re moving faster than anticipated, but we are still looking for recovery in other sectors of the economy.”

Construction starts dropped 7.9% in the second quarter but Artola said relaxation of capital gains taxes and some industry regulation should help turn the numbers around. She said pro-construction legislation will be introduced in the National Assembly later this year.