Ecuador’s economy grew 4.5% in 2013, well above the official target of 4.05% but below the 5.1% growth registered in 2012.
In its quarterly report, the country’s central bank said that last year’s growth was driven by non-oil sectors, especially construction, which continued to be the growth engine of the Ecuadorean economy.
Non-oil sector activity expanded 4.9% last year, while oil activity increased by 1.4%.
In the fourth quarter of 2013, Ecuador’s gross domestic product rose 5.6% from a year earlier and 1.2% from the third quarter.
Since President Rafael Correa’s took office in 2007, much of Ecuador’s economic growth has been based on public spending, driven by high oil prices and increased tax collections. The economy has grown on average by about 5% a year.
“The economic stability has not translated into a structural shift for higher investment and the private sector only represents 25% of the strategic oil sector,” investment bank Jefferies said in a recent report.
Additionally, the bank said, there has been a notable deterioration in the fiscal performance with the need to finance the consolidated public sector deficit at 4% of GDP in 2013. There has been a deceleration in revenues that hasn’t coincided with a slowdown in spending, Jefferies added.
In 2014, Ecuador expects growth of 4.5% to 5.1%. However, many economists believe the government’s outlook is too optimistic because of a slowdown in the construction sector, the planned shutdown of Refineria Esmeraldas, Ecuador’s biggest refinery, in the fourth quarter for an overhaul, and a restriction in local production caused by import substitution policies started by the government.
Alberto Acosta, an economist with private consulting firm Grupo Spurrier, expects growth of about 4% for 2014.
“It is likely that the government won’t reach all the new financing that it needs and this year it will have fewer resources for public spending. Additionally, private sector construction has been affected by new restrictive rules on developement, which will have a negative influence on growth,” said Acosta.